Hosted by Jon Fell, Head of Telecoms at Osborne Clarke, in this webinar the Osborne Clarke team and industry specialists discussed the impact of the Covid crisis on the UK telecoms industry, its influence on market and regulatory policy over the coming 12 months and what the future of networks will look like.
Covid's impact on the telecoms industry
Hannah Drew, Associate Director at Osborne Clarke, discussed the impact of Covid on the telecoms industry with Political Intelligence's Alex Mather, Senior Consultant and Andrew Kernahan, Associate Director. Political Intelligence is the firm behind two industry trade associations: the Internet Telephony Services Providers' Association (ITSPA) and the Internet Service Provider's Association (ISPA).
Andrew kicked off the discussion by highlighting how industry bodies had at the outset of lockdown defended concerns about the industry withstanding the increased pressure on the network from working from home. Three months on, it seems they were right. The networks have shown their resilience and it's clear that the technology being used by those working from home has been a success.
It is not all positive news, however. Andrew acknowledged that local authority decisions meant network roll out was delayed as we went into lockdown, despite the government advising that building networks could continue. ITSPA members have also felt the impact of Covid on their businesses, with at least half of members furloughing staff, applying for government support and saying that they hadn't yet seen the worst of the financial impact.
Given our new reliance on connectivity, has there been a shift in the expectation of consumers? Will they now expect more from their mobile phone or broadband provider? Andrew suggested so; telecoms and fixed networks appear to be cementing themselves within the "essential utility" category. ISPA already talks about home broadband as a utility. The industry put in place measures to ensure that vulnerable customers receive additional support during a three month period of the crisis to counter the increasing digital divide. Such initiatives are commendable but they also set a high bar for future conduct from the industry.
One of the biggest changes in the regulatory framework for telecoms providers is the European Electronic Communications Code (EECC) which will have an impact on over-the-top (OTT) communications providers such as Zoom, Teams and WhatsApp for the first time. While the regulations will be lighter touch for these OTT players (as compared to traditional network providers), they will be required to ensure that their services are secure.
The regulatory challenges themselves haven't changed but the regulatory and economic environment has.
Alex confirmed that the EECC is a main priority for many ITSPA members but there is a concern that resources needed to respond to the Covid crisis will need to be diverted to manage compliance with regulatory change due to the EECC; Member States have until 21 December 2020 to implement the EECC provisions in domestic law.
In addition to the EECC, Alex highlighted that the consultation for the Wholesale Fixed Telecoms Market Review was due out before the summer, with implementation by April 2021. There is some concern from the industry that the implementation date has not changed, but the timeframe for consultation has been squeezed, which could lead to the regulations being rushed.
Lockdown has emphasised the importance of fibre broadband roll out and the government has challenged the telecoms industry to, "think the unthinkable". The sector has been invited to come up with shopping list of things it needs to achieve the availability of gigabit capable networks across the UK by 2025. Whilst regulatory changes may help, the industry needs to be certain that any new framework will be sustainable and proportionate. After these extraordinary times, businesses would like to see some stability to allow them to just get on with the day job.
The future of networks
Paul Fleming, Legal Director of Networks and Research at BT discussed how network technology is evolving with the changing demands on capacity with Eleanor Williams, Associate Director at Osborne Clarke.
As expected, during the Covid crisis mobile traffic has gone down, home broadband usage has increased and roaming has completely disappeared. Paul confirmed that the networks have been coping exceptionally well despite the fact that around 50% of the UK population have been working from home. Years of building extra capacity into the networks and accurate forecasting has meant that the networks have stood up to the challenge.
During an average working day, EE typically see 5 terabytes (TB) of traffic, which has increased to 7.5TB during lockdown mainly due to the use of "low-quality" video such as video conference services (Zoom, Teams, etc.). In comparison, traffic peaks around 6-9pm in the evening when everyone is streaming higher quality video in the form of Amazon Prime and Netflix or watching football. Traffic at this time can reach up to 17.5TB but the network has been built for that demand. So the additional demand from people working from home during the day "barely touches the sides" for the networks when it comes to capacity.
On the future of networks, there is a need for an evolution of network technology and networks have to find ways to become more efficient. EE has seen 40% more traffic year-on-year for the past few years. While usage of the network has increased, this does not translate into increased prices for consumers, who continue to expect more for less. Together the increased usage and the downward pressure on prices drive network innovation and efficiencies. Examples of this include using spectrum in a more efficient way and leveraging developments in software design such as software defined networks, virtualisation and cloud native applications.
With the trend of moving to the cloud, Paul confirmed that BT has recently struck a deal for a new mobile cloud core network (the first he is aware of in the UK). The new cloud platform will provide the business with a distributed and scalable solution to supplement its current proprietary core network.
A greater appreciation for the telecoms industry?
Wrapping up the webinar, our speakers discussed another positive outcome of the Covid crisis: the telecoms industry is receiving a renewed appreciation from its customers. It seems the acceleration of new technology and our reliance on connectivity will continue – Covid has given us but a mere glimpse of our digital future and the networks are advancing to make it happen.