European Telcos: Which Future Operating Model?

R. Pritchard

Summary Bullets:

• Europe’s rumor mill is running at high capacity, but it’s becoming ever clearer that – despite the EU – in telecoms, the region remains a series of national markets.

• Activist investors, workforce reductions, fast-changing technology, hyper-competition, multiple layers of regulation, socio-economic changes, and the digitization of everything have got C-suite heads spinning.

Unsubstantiated reports in the press of BT seeking to replace its CEO, Philip Jansen, are typical of a market that is not entirely sure where it is going. Activist investors, cross-shareholdings, and in-country consolidation are confusing enough for the telco C-suite. Add to that, the complications of national and EU regulation, growing ESG requirements, employee ‘rightsizing,’ broad socio-economic and workplace changes, rapidly evolving technologies, the key role of digitization across all aspects of home and work life, plus the need to invest in both infrastructure and systems – it is no wonder that heads are spinning.

Underwater Data Center Going Swimmingly

R. Pritchard

Summary Bullets:

• A mini edge data center is being used to heat a public swimming pool in Devon, southwest of England (UK).

• Innovation is symptomatic of how sustainability issues – and marketing opportunities – can be addressed using imagination and technology.

UK company Deep Green is heating a public swimming pool in Devon (UK) with a ‘washing machine-sized’ edge data center. The data center’s computers are surrounded by oil to capture heat, which then is passed by convection/heat exchanger into the swimming pool and heated to about 30 degrees Centigrade. The pool, run by the local (Exmouth) council, gets the heat for free, and Deep Green and its customers can rest knowing they are contributing to dealing with climate challenges and supporting a free-of-charge municipal service. Seven further municipal pools have subsequently signed up for the service in the face of multiple swimming pool closures as a result of energy costs.

UK SOHO Market Heats Up

R. Pritchard

Summary Bullets:

• Infrastructure-focused Giganet has launched a wholesale connectivity offering targeting the SOHO market for its reseller, managed service provider, and ISP partners.

• This re-emphasizes both the importance of the SOHO and SME markets as a key target as well as of the fragmentation of the supply/value chain.

Small and medium-sized enterprises (SMEs) and small office/home office (SOHO) businesses are becoming the telecoms target markets of preference across many countries at the moment. Given the background of deglobalization and trade wars, combined with many individuals choosing to pursue their own path or work on side businesses as a result of the pandemic as well as associated experience of working from home for white-collar workers (or laid-off blue-collar workers), smaller business is where much of global growth is being delivered, presenting an opportunity for many companies across all verticals, including the telecoms sector.

Customer Needs, Not Speeds

R. Pritchard

Summary Bullets:             

• CityFibre, the champion of altnets in the UK, is reported to soon axe 20% of its workforce due to the UK’s “struggling” economy.
• An obsession with end user needs rather than financing and technology is needed to encourage customers to migrate from their current broadband solutions.

Most folks waking up in the morning may think ‘I need more fiber’ – but that is usually a dietary consideration rather than anything bandwidth-related.

With reports that CityFibre, traditionally the darling of UK altnet market, is set to cut up to 400 jobs from its workforce of 2,300 (but will add 200 more, giving a net job loss of about 200), questions need to be asked and answered.

The Art of Buying the Market

R. Pritchard

Summary Bullets:

• Partnership positioned as a digital transformation of the London Stock Exchange Group’s (LSEG) technology infrastructure and data analytics using the Microsoft cloud and supporting over 40,000 Refinitiv financial institutions.

• Co-creation of such ‘foundational platforms’ by super-sized tech companies also have the advantage of ‘locking in’ customers for future revenues – if the regulators don’t intervene.

Co-creation is a growing trend across the technology market: It is the process of forming a close partnership or even joint venture to enhance customer solutions using technology in a digitizing world. The theory is that both large enterprises and their technology partners benefit from inventing new products and services, combining technology with deep industry knowledge.

BT – Would You Like Broadband with Your Pizza?

R. Pritchard

Summary Bullets:

• BT has partnered with Just Eat and Checkatrade to offer discounted packages for broadband and mobile as part of its Enterprise Customer Charter.

• Service providers everywhere are looking to exploit third-party channels to maximize their addressable market – especially in mass markets like SOHO/micro businesses.

BT announced partnerships with Just Eat and Checkatrade to offer discounts on business broadband packages and mobile deals as part of the UK incumbent’s Enterprise Customer Charter – its ‘blueprint to boost UK plc by exploiting cybersecurity, digital services, and purpose-driven goals.’

No More Faxes

R. Pritchard

Summary Bullets:

• UK regulator Ofcom is consulting on removing fax services from the UK’s universal service obligation (USO) for BT and KCOM.

• Once a core feature of office life, the history of fax machines goes way back, but they are set to be consigned to tech history.

The facsimile (fax) machine was ubiquitous in offices from the 1980s through the end of the 20th century, but the impact of email, the world wide web, and the relentless rise of unified communications and collaboration (UC&C) platforms is set to witness the demise of a technology that served users well in analog days (as long as there was paper and ink in the machine, no blockages, and not someone else using it already).

What the UK Economic Rollercoaster Might Mean for Enterprise Telecoms

R. Pritchard

Summary Bullets:

• Reaction times to extraordinary events have improved, but the economic crisis is different as interest rates are rising with the potential of exposing under-performers.

• ‘Zombie’ service providers and ‘zombie’ customers will be exposed, leading to supply-side consolidation and increased competition for a smaller base of corporate and SME business.

Since the ‘mini budget’ of September 23, 2022, things have become extra-extraordinary in the UK with billions of pounds being thrown around to counteract the resultant economic impacts and to protect citizens from the knock-on effects of Russia’s war in Ukraine. While the general public worries about paying mortgages, the rising daily cost of living, and global instability, telecoms service providers must plan for a range of potential future scenarios and outcomes and develop ‘what if?’ thinking in response to evolving market circumstances.

Virgin Media O2 JV Infrastructure Investment Accelerates UK Broadband Gold Rush

R. Pritchard

Summary Bullets:

• Virgin Media O2 joins InfraVia Capital Partners to spend GBP4.5 billion on a fiber wholesale joint venture (JV) to offer connectivity to up to seven million premises

• As with any other gold rushes, the only guaranteed winners are the folks supplying spades, diggers, and other infrastructure provision services

Virgin Media O2 has announced a partnership with InfraVia Capital Partners to form a JV deal, which is expected to close in Q4 2022 to build a full-fiber network to provide connectivity to up to seven million premises as a complementary geographical expansion to Virgin Media O2’s existing target of 15.5 million premises – delivering a UK fiber footprint of 80% coverage on completion. The focus of the 50:50 JV will be to offer wholesale connectivity services both to Virgin Media O2 (as anchor tenant) and to other communications and internet service providers. The timing of the announcement when BT Openreach employees were on strike is more than a coincidence.

Vodafone Delivers Purpose in Action

R. Pritchard

Summary Bullets:

• Vodafone is seeking to demonstrate how it uses technology to address connected education and connected health markets in both developed and developing countries.
• Propositions such as ‘school in a box’ and m-mama in Africa have helped in delivering the education sector and safer healthcare for pregnant women.

Vodafone recently presented examples of its Purpose initiative, whose goal is stated to be “we connect for a better future by enabling inclusive and sustainable digital societies.” The three pillars of this strategy are Digital Society (connecting people, places, and things and digitizing critical sectors); Inclusion For All (ensuring no one is left behind in a digital society); and Planet (tackling the climate crisis, reducing carbon emissions, and helping others reduce theirs). These all demonstrate practical implementations of the company’s environmental, social, and governance (ESG) agenda, as well as demonstrating that offering socially useful applications can also be a commercial opportunity.