BTwatch
This release
: #303
March 2019: 68pp
Releases/year: 10+
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EXECUTIVE BRIEF

GROUP

Strategy: BT and Openreach spark heated debate on UK fibre [p.6]

  • McTighe calls for state help to secure a fibre future

FTTH conference: Speakers [p.7]

  • UK finally makes its mark in full fibre
  • Building a network no‑one wants — yet…
  • Mesch winds up BT, calls for a regulatory refocus
  • Hyperoptic wants Ofcom to focus more on offering alternatives
  • Sherman plays up the generation gap
  • The Sherman and Mesch SmackDown

Transformation: Beyond the heat, a little light… [p.12]

  • BT taking to the streets for access revolution

BT Italia scandal casts long shadows [p.13]

  • Ex CEO Patterson gives forth

BT TSO: BT selects Ciena’s data centre interconnect platform [p.15]

  • Watson outlines 2019 priorities

Suppliers: Industry pushes back on Huawei ban prospect [p.17]

  • Fact‑based assessments and UK processes as a guide
  • Huawei stands up for itself…
  • …BT stands by its partner
  • … and Huawei notes BT putting money where its mouth is

People [p.20]

  • Table: People movement highlights

Social Responsibility: BT backs charity Jangala to develop low‑cost Wi‑Fi [p.22]

CONSUMER

5G: Mavenir and Nokia tapped for future 5G, VMware in at the start [p.24]

  • EE flags key 5G partners at MWC
  • OnePlus and Qualcomm also in on the act
  • Allera on 5G

Networks: Allera hints at 5G sharing with Three [p.26]

  • BT defends interests under rural coverage pressure

Products and Services: EE launches inclusive data offers [p.30]

  • Zero‑rated data, with net neutrality protections
  • Data Pass offers a long‑term binge opportunity

BT expands BT Sport availability, keeps up monetisation [p.32]

  • Further developments planned as BT commits to content innovation

Suppliers: BT renews contract with Synchronoss for BT Cloud [p.34]

  • Paywizard deal expands to cover PPV

ENTERPRISE

Contracts: BT supplies LoRaWAN network to Northumbrian Water [p.38]

InLinkUK: Another rollout blow for InLinkUK [p.39]

Partners: Resilient smartnumbers deal renewed [p.41]

Products and Services: BT and Mavenir promote new shared vRAN solution [p.42]

  • BT hopes to appeal to landlords and operators with a problem shared
  • Operators on board as 5G approaches
  • Open to Open RAN
  • Mavenir on a roll

Pelipods put to work in Final Mile offering [p.45]

GLOBAL SERVICES

Partners: Kollective role in Qumu BT deal flagged [p.48]

OPENREACH

Fibre: Universal FTTP promised for Salisbury in 2020 [p.5]

  • Copper retirement plans step up a gear
  • Building a fibre environment to Openreach’s liking
  • Copper closure entwined with PSTN plans
  • New ribbon cables to take fibre further, faster

Products and Services: Openreach aims for improvements with chatbots and analytics [p.54]

  • Openreach praise for quick Qlik analytics
  • fast self-install offers Consumer head‑start

Digital Britain: New unit to target state funding [p.57]

Networks: On‑demand and fibre‑only offerings edge forwards [p.58]

Competitors: TalkTalk maintains Openreach role in fibre goals [p.59]

  • Openreach a long‑term partner for TalkTalk network future‑proofing
  • Vodafone raises pressure on dark fibre
  • Cooperation on sharing bigger masts mooted
  • Virgin Media updates on Lightning

Regulatory: Ofcom asks for views on Openreach [p.62]

FURTHER READING

INDEX

Symbols

21st Century Fox 20

 - Sky

  --  Sky Sports 36

A

ADVA Optical Networking 21, 24, 44

Alphabet

 - Google

  --  Android 26

Amazon 30, 31, 36, 64

 - Amazon Prime 30, 31, 64

América Móvil 34

Apple 30, 32, 64

 - Apple Music 30

AT&T 34

B

BoxNation 32, 35

British Broadcasting Corporation (BBC) 33

Broadband Delivery UK (BDUK) 57

BT Group 6, 7, 10, 11, 12, 13, 14, 15, 16, 20, 22, 24, 41, 48, 54, 58, 60, 62

 - BT Consumer 19, 21, 25, 26, 34, 36, 56, 61

  --  BT Broadband 32, 34

  --  BT Cloud 34

  --  BT Infinity 21

  --  BT TV 32, 35, 36

  --  Plusnet 14

 - BT Enterprise

  --  BT Facilities Services 14

  --  BT Ireland 40

  --  BT smartnumbers 41

  --  BT Wholesale & Ventures 45

   ---   InLinkUK 39, 64

   ---   Pelipods 45

 - BT Global Services 13, 21, 41, 47, 48, 65

  --  BT Italia 13, 14

  --  BT Radianz 65

  --  BT Security 21

  --  BT Technology, Service and Operations 15, 63

   ---   Adastral Park 14, 22, 44

   ---  Innovation Martlesham 22

 - BT Tower 42

 - Directors

  --  Kirkby, Allison 20

  --  McTighe, Mike 7

 - EE 12, 14, 19, 21, 24, 25, 26, 27, 28, 30, 31, 32, 35, 36, 43, 64

 - Emergency Services Network 21, 28

  --  MBNL 26

 - Executives

  --  Allera, Marc 19, 26

  --  Artley, Jennifer 48

  --  Auguste, Bernie 21

  --  Bathia, Anika 21

  --  Beer, Jackie 20

  --  Bouji, Rewa 20

  --  Calder, Marianne 20

  --  Cameron, Richard 13

  --  Catton, Neil 20

  --  Chatham, Jason 21

  --  Coulson, Nigel 21

  --  Diss, Jo 20

  --  Draper, Elizabeth 21

  --  Evans, Peter 40

  --  Hindhaugh, Jamie 33

  --  Hunt, Priya 21

  --  Jenner, Angela 21

  --  Jones, Gavin 43

  --  Kirkpatrick, Andrew 21

  --  Korzeniewski, Paul 21

  --  Ladha, Neynes 21

  --  Loxley, Tim 21

  --  Maddison, Amanda 20

  --  Maltarp, Damien 40

  --  Marshall, Danny 21

  --  McQuade, Gerry 40

  --  Milligan, Katie 61

  --  Pollard, Mark 21

  --  Selley, Clive 50

  --  Sherman, Michael 7, 10

  --  Sims, Chris 38, 40

  --  Swinden, Matt 21

  --  Tendler, Alice 21

  --  Thomas, Carl 21

  --  Watson, Howard 16, 48

  --  Whale, Andy 53

 - Ex-executives

  --  Alvarez, Luis 13

  --  Patterson, Gavin 11, 14, 20, 63

  --  Sciolla, Corrado 13

 - Openreach 6, 7, 8, 9, 10, 11, 12, 21, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 65

C

CBRE Group 14

CBS 53

Ciena 15, 63

Cisco Systems, Inc. 15, 48

CityFibre 6, 7, 9, 10, 11, 50

CK Hutchison 26

 - Three Group

  --  Three UK 19, 25, 26, 28, 43

Comcast 36

Communications Workers Union 14

D

Dell EMC 24

Department for Digital, Culture, Media and Sport (DCMS, UK)

 - Broadband Delivery UK (BDUK) 65

Digital Britain 57

E

ECI 58

Electricite de France 45

 - EDF Energy 45

Electronic Communications Code 12

Equinix 21

Ernst & Young 20

European Union 18

F

Facebook 44

FTTH Council 6, 7, 63

Fujikura 53

G

Gemini 48

General Electric Co. (GE)

 - NBC Universal

  --  National Broadcasting Company (NBC) 36

Goldman Sachs 10

H

High Court 39

HTC 25, 64

Huawei

 - Huawei Cyber Security Evaluation Centre 18, 19

Huawei Technologies 17, 18, 19, 24, 58, 63, 64

Hyperoptic 7, 8, 9, 10

I

IndyCar 36

Inmarsat Ventures 21

Internet Service Provider Association 61

ISS 14

J

Jangala 22, 63

Juniper Networks 15

K

Kingston Communications (KCOM) 20, 61

Kollective 48

KPMG 13

L

Liberty Global 61

 - Virgin Media 20, 32, 35, 36, 50, 61

M

Mavenir 24, 42, 43, 44

Microsoft 32, 54

 - Xbox 32, 64

Mobile Broadband Network Ltd (MBNL) 26

MTV 30, 31, 64

N

National Security Agency (NSA, USA) 18

Netflix 31, 36

Nokia 24

 - Nuage Networks 15

Northumbrian Water 38, 64

NTT 64

O

Ofcom 6, 7, 9, 14, 27, 28, 31, 36, 51, 53, 54, 60, 61, 62, 65

 - USO 12

OnePlus 25, 26, 64

P

Paywizard 35, 64

Persimmon 12

PricewaterhouseCoopers 13

Procter & Gamble 20

Q

Qlik 54, 55, 65

Qualcomm 26

Qumu 48, 65

R

Resilient plc 41, 64

 - smartnumbers 41

Riverbed Technology 48

Rolls-Royce plc 8

S

Salesforce 41

Samsung 32, 64

SFR 34

Sprint 25

Superfast Cymru 57

Synchronoss Technologies 34

T

TalkTalk Telecom Group 36, 56, 59, 65

 - FibreNation 59

Tata Group

 - Tata Consultancy Services Ltd (TCS) 48

Technology

 - 3G 19, 36

 - 4K (Ultra HD TV) 33

 - 5G 6, 10, 11, 16, 17, 18, 19, 20, 24, 25, 26, 27, 42, 43, 44, 63, 64

 - Broadband 8, 36, 40, 55, 56, 57, 61, 65

 - Cloud radio access network 44

 - Ethernet 54, 55

 - Femtocells 43

 - Fibre 6, 7, 8, 9, 10, 11, 40, 50, 51, 52, 53, 54, 55, 57, 58, 59, 60, 61, 63, 65

 - Dark fibre 60

 - Fibre-to-the-cabinet (FTTC) 54, 57

 - Fibre-to-the-premises (FTTP) 6, 7, 8, 9, 50, 52, 53, 54, 61, 63, 65

 - G.fast 53, 56, 59, 61, 65

 - GSM 17

 - HD 35

 - HDR 33

 - Internet of Things 38, 45

 - IP 16, 58

 - LTE 38

 - LTE-M 38

 - M2M 45

 - Microwave 11

 - NB-IoT 38

 - OTT 32

 - PSTN 16, 52, 58

 - Smart TV 32

 - Ultra High Definition 33

 - Unified Communications 21, 41, 48

 - VoD 36

 - Wi-Fi 22

Tele2 20

Telecom Infra Project 22, 24, 44

Telecom Italia SpA 13

Telefónica 21, 26, 43

 - O2 UK 28, 43

Telstra 25

Top-Up TV 35

Transport for London 20

 - London Underground 20

TVPlayer 31

U

UEFA

 - Champions League 14

V

Verizon Communications 34

Visa 21

VMware 24

Vodafone 19, 26, 28, 43, 50, 54, 60, 65

 - UK 26, 28, 60

W

Walt Disney Company, The

 - ESPN 32, 36

Welsh Assembly 57

Westminster City Council 39, 64

Wipro Ltd 20

World Poker Tour 36

Y

YouView 21

  • Openreach focused on big picture projects for fibre rise, and the end of the copper age.
  • BT looking beyond fibre final mile for a ubiquitous connectivity future.
  • Altnets fear Ofcom may be sleepwalking into enabling a new Openreach monopoly through fibre switchover plans.
  • Mesch and Sherman lock antlers, with CityFibre boss claiming BT threat “to drive me out of business”.

BT Group and Openreach featured on a panel focused on the future of fibre-to-the-premise (FTTP) at the FTTH Conference, the FTTH Council Europe’s annual get-together, held in Amsterdam, Netherlands, in March 2019.

Senior BT representatives appeared alongside the leadership of rival network providers in a session entitled Investment & Markets – Full Fibre and 5G Future for the UK which, alongside policy debate, saw tempers frayed and tensions spill over.

Representatives of BT and CityFibre descended into squabbling as the event continued, but, beyond the theatrics, a few indicators of both BT and Openreach long-term strategy could be gleaned.

FTTH Conference speakers:

  • Mike McTighe, Chairman of Openreach.
  • Greg Mesch, Co-founder and Chief Executive, CityFibre.
  • Dan Butler, Director of Communications and Policy Strategy, Hyperoptic.
  • Michael Sherman, Chief Strategy & Transformation Officer, BT Group.

UK finally makes its mark in full fibre

The FTTH Conference saw the announcement of the FTTH Council’s latest global fibre rankings, with the UK making it onto the list for Europe for the first time, passing the minimum 1% adoption entry bar with FTTP penetration reaching 1.3% by the end of the year. The UK placed last on the 30+ country list, with Latvia at the top with over 50% fibre penetration.

The Council also noted that across Europe as a whole “alternative players are the most involved in [FTTP] expansion, with a contribution of around 55%.”

McTighe calls for state help to secure a fibre future

Openreach’s Mike McTighe kicked off proceedings, with a presentation underlining the access services business commitment to becoming a fibre-focused business.

The Openreach Chairman stated, “Openreach, to be very clear, is now focused on becoming a full fibre to the premises [FTTP] business”, and detailed progress made by the business in the past year to support this. He highlighted the expansion of the Fibre First programme, the enhanced recruitment drive, and a heightened focus on providing training and testing facilities for fibre deployment (BTwatch, #293, #296, #302, and see separate report).

McTighe did, though, call for continued backing from the government and Ofcom to enable FTTP progress. While welcoming recent commitments to ease the planning and access restrictions that can slow rollout progress, McTighe suggested that “much more needs to be done” and that what was needed from the authorities was “big, bold steps”.

“When we can’t get into 80% of the premises in the City of London and 30% of the premises in the suburbs, we need fundamental change which helps us getting access to those properties and helps with permissions when installing our network.” — McTighe.

Among the steps the Openreach Chairman expects could be beneficial for all infrastructure investors is a long-term business rates exemption for fibre network installations. McTighe called for a 20-year exemption from April 2020, which he said would provide certainty for investors and enable network builders to focus on rapid rollout.

Building a network no-one wants – yet…

Despite Openreach’s enthusiasm for FTTP, McTighe does consider that Openreach is building ahead of demand, and that fostering a market for next-generation services will present a challenge. Communications providers will need to “educate” customers, and provide compelling reasons to upgrade.

Just ahead of Openreach launching its consultation on end-to-end migration to fibre and away from copper (see separate report), McTighe also reiterated the Openreach view that, once FTTP becomes fully available in the region, the process of retiring the copper network needs to follow as quickly as possible to make the investment worthwhile.

“You can’t just build it and they will come, it just doesn’t work… there are more than 17 million homes and businesses across the UK that today can order a better broadband service over our network. But they haven’t upgraded to use it.” — McTighe.

In this view, McTighe saw some support from Dan Butler, Director of Communications and Policy Strategy at Hyperoptic, who, as many about him appeared to lose their heads, was a calm considered presence on the panel.

Butler concurred that there is a need to change customer outlook to create demand that is currently lacking in a highly price sensitive market. Butler was concerned, though, that there is a risk that as a provider-driven switchover progresses – as favoured by Openreach and accepted by its communication provider customers – alternative suppliers will be locked out of the process. He is also concerned that if end-users are prodded to move to “Rolls Royce fibre” through subsidised or regulated pricing, “that would torpedo the investment case”.

“We have a demand-side problem, but government isn’t interested in a demand-side problem because they are less tangible than supply-side interventions and so it’s gone amiss in the government’s digital strategy over the last ten years.” — Butler.

Mesch winds up BT, calls for a regulatory refocus

CityFibre’s Greg Mesch used his presentation to praise his business model, berate BT and Openreach, and call on Ofcom to rethink its approach to fostering competition at infrastructure level.

Mesch emphasised the disruptive nature of the CityFibre plan, which he suggested could bring fibre to the end-user with a fraction of the engineering workforce needed by Openreach, with the goal of taking 20% of the UK full fibre market.

He also called for Ofcom to focus on helping competitors to Openreach more than trying to manage Openreach behaviour, demanding a “fair bet” of his own. One element of regulation that Mesch felt could be improved was on transparency of Openreach’s deployment plans to avoid the risk of overbuilding.

Openreach has recently begun to provide a degree of detail on exchanges set to be upgraded as part of its FTTP programme (BTwatch, #302), but Mesch deemed that the information was insufficient to enable effective planning. In this complaint, Mesch was backed up by Hyperoptic’s Butler, who described the initial efforts by the BT-owned business as “neither use nor ornament”.

Hyperoptic wants Ofcom to focus more on offering alternatives

Hyperoptic’s Butler presented a more forensic review of the regulatory situation in the UK, and the changes needed to make altnet businesses more effective. While an Openreach customer for most of its services, the business is increasingly focused on its own FTTP rollout, and aims to pass five million sites by 2024 (building on previous goals of two million homes by 2022 – BTwatch, #278, #298).

While noting that the stated intent of both government and regulator is to encourage competition at an infrastructure level, Butler was critical of the Ofcom approach to fibre regulation which he said tends to boil down to “incentivising builders by disincentivising renting”. More direct action to help operators willing to invest is said to be key to fostering infrastructure competition, at least partly because the pace of investment necessary to build a business case means competitors will need to move faster than the incumbent rather than react to its actions.

As well as suggesting that barriers to competition need to be lowered for emerging infrastructure businesses, Butler also believes that lighter-touch regulation plans from Ofcom are premature. Butler was critical of Openreach’s upcoming duct and pole access products and, as noted above, unhappy with the level of Openreach clarity on timelines for service provision, which he said makes planning very difficult. He also said Ofcom has not given itself enough leverage to compel Openreach cooperation.

Butler said plans to deregulate wholesale pricing with the next Ofcom Business Connectivity Market Review (BTwatch, #301) are based on assumptions of infrastructure competition that may be misplaced. He suggests that even in areas where there are multiple network providers there is insufficient evidence to show that communication providers will be able to easily switch between networks, thereby potentially undermining price competition.

Sherman plays up the generation gap

Michael Sherman’s presentation focused on the second element of the sessions title – the anticipated impact of 5G. In a speech that may have jarred with an experienced industry audience, the BT strategy executive suggested that the infrastructure players had missed the point of next-generation networks, and were not sufficiently focused on end-user demands, which would be for new and improved experiences, rather than technological advances.

Sherman played down the significance of fibre to the home, which he suggested would be usurped in many cases by 5G capabilities. While he did acknowledge that delivering mobile capacity and density would prove a challenge he pointed to convergence, apparently centred on mobile, as his vision of the future.

Going further, and perhaps irking his audience and fellow panel members, Sherman argued that altnets were focused on outdated models and faulty investment cases, comparing the current fibre rush to the overbuilding of cable assets seen in previous eras. CityFibre was only recently acquired by a Goldman Sachs-led consortium, and, in 2018, Hyperoptic secured an additional £250m from a group of banks, but Sherman warned that, based on his experience in consultancy, investors often do not understand the technology and pace of change going on within the sector.

“And this is the point: we are building technology and taking investment cases that are faulty investments…this overbuilding, they are going to go to defunct just like what happened in the cable industry.” — Sherman.

It was this suggestion that appears to have particularly prompted a spiky response from CityFibre’s Mesch, and the sparring between the two executives that became increasingly full-blooded.

Sherman also appeared more focused on infrastructure a step back from the final mile, and stressed that the capabilities at the core were the bedrock of future connectivity, and would become increasingly important as the number of connected devices continues to multiply. He said that, without a core network as sophisticated as BT Group’s, it will be a challenge to get “more than a trickle” at the endpoint. “You don’t really have a network, you just have a little connection that [can easily be replicated] with millimetre wave technology.” Sherman did acknowledge that fibre and GPON investment will remain important, but that it was only an element of the development needed.

While Openreach and McTighe stressed independence, Sherman appeared more willing to conflate ‘the Group’ and its legally separate access services business, which did not help as Mesch decried the monopolistic behaviour of the Group, and the cosy relationship between the entities.

“We can’t just keep talking about things from the past, arguing about ducts and poles: yes, it’s important and we’re going to figure it out with government, but it is not the issue of what’s happening in the competitive landscape today. Competition is here today and…you’d better look out for that 5G wave that is going to come and smack you in the face.” — Sherman.

The Sherman and Mesch ‘SmackDown’

The warning of a 5G smack in the face certainly appeared to invigorate Mesch, and the two executives quickly took to exchanging (verbal) blows.

With little regard for the event moderator, Mesch jumped in to deride Sherman’s UK experience and consulting background commenting “‘Competition is here today?’ He’s been here 60 days!”, before going on to sarcastically clap the BT executive.

Sherman was up for the fight too and, apparently baited by Mesch, said “I give you two years until you’re bankrupt… maybe you’ve got three.” Sherman later attempted to row back his comments, and insist he meant CityFibre would be forced to restructure, but the accusation gave Mesch plenty of ammunition.

The executives fell into tit-for tat, arguing about the merits of microwave technology and the validity of Openreach’s infrastructure rollout, until the moderator was able to (temporarily) change the subject before Mesch returned to Sherman’s comments on CityFibre insolvency. Spinning the Sherman comments as a (implied, or inferred) direct threat to “drive me out of business”, the CityFibre CEO claimed that it underlined BTs underlying attitude towards competition.

“In the next two years let’s see if BT uses anybody else but Openreach’s fibre, because that is what he’s saying. Even if you build a competitive product and offer it to me cheaper, I’d still rather drive you out of business… We talk about competition, you said you’d drive me out of business. Now, the whole copper to fibre switch is fake. It’s like fake fibre. It’s not real. It was invented in the mind of incumbents to try and figure out a way to take the revenue base that exists on copper and keep it all for [itself].” — Mesch.

By this point the session was over-running, and BTwatch had to leave the auditorium, to the sound of Mesch all but chanting “Fake Fibre”, and loudly.

Beyond the heat, a little light…

The drama of the Mesch/Sherman slanging match offered little substance in terms of the future of the UK’s communications infrastructure, and the preceding presentations were big on ambition in some places, but mired in regulatory detail in others, and generally lacking in the expression of a clear strategic vision. However, there was some light shone on the bigger picture of BT Group’s outlook and mindset surrounding next-generation connectivity.

Sherman’s somewhat casual approach to the Openreach final mile might suggest the business will be in a position to press on with its own priorities with less Group interference. McTighe also appears committed to the creation of a new Openreach identity and the major long-term infrastructure projects that will finally draw the copper age to a close.

Sherman appeared to suggest a BT future strategy that might circumvent regulatory and government interference by focusing on unregulated aspects of the infrastructure, and a technology-agnostic attitude that could enable BT to follow through on long-term convergence aspirations. With this approach, the Group could lean more on EE capabilities, emerging technology in areas such as backhaul, and its own core strength to provide next-generation services.

BT taking to the streets for access revolution

Further evidence of this more diverse BT approach can perhaps also be seen in the calls the operator made as BTwatch went to press, for an opening up of access to street furniture across the UK.

The telco has suggested that previously issued local authorities’ wireless concession contracts are now not only adding an unreasonable wholesale cost and potential barrier to improving urban mobile coverage, but may also be unlawful under the terms of the updated Electronic Communications Code in force since 2018.

BT is offering to hand back its own licences, which it acquired in the initial land-grab for local access rights, as a sign of its commitment in a move that could facilitate a new approach to serving endpoint connections. Further coverage of the BT proposals will feature in the next BTwatch.

Image: Greg Poulos / Flickr (CC BY-ND 2.0)

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