Ofcom: What if you could grow the telecom industry exponentially?

Dear Ofcom, you probably already are seeing that the number of European telecommunication providers is unsustainable. Vodafone and Three are already begging you to be able to merge. Soon others will. By just approving what telecom operators propose, you will see mobile operators go from 4 to 2. A duopoly will be able to set higher prices at the detriment of UK citizens. Keeping with 4 might result in bankruptcy. So what are your choices but to approve mergers? 

What if you had another choice?

Telecom operators have been milking their data plans for two decades now. They have not launched any successful new products that give them substantial new revenues. They went from five revenue sources (copper connectivity, TV, calls, SMS and mobile data) to only two (fibre connectivity and mobile data). To tell you the truth, they have wasted lots of money in the last two decades on me-too products like cloud computing, mobile app stores,... So if a couple of them go bankrupt, that would not be the end of the world.

What customers really need is reliable wireless communication channels. That is not the same as having mobile broadband operators. What if companies and even individual households could be their own telecom operator?

What if instead of 4 large network operators, we would have thousands of micro network operators? 

At this moment, a revolution is happening in the communications industry. The industry is becoming software-defined instead of hardware-restricted. Cloud network function virtualisation, software-defined radios and lots of other technologies have converted the communications and networking industry from a hardware-restrained to a software-defined ecosystem. Unfortunately none of your four licensed mobile operators is using these capabilities to launch innovative products and your restricted regulation is stopping others from using them. To be able to get spectrum or to set up a mobile base station in the UK, a lot of trees need to be killed. The process requires lots of red tape and paper.  

What if any fibre modem in every office, shop or house, could have a software defined-radio in it? What if that fibre modem could be hosting at least 6 network operators: the current 4, the open roaming network and the owner’s mobile micro network? In a world of virtual SIMs, each business and household should be able to manage their own private network. Parents should be able to manage the contracts for them and their children. Businesses can manage them for their employees. The only two things people need to manage are their data plan limits and who can roam on their private network. Just like WiFi, visitors should be able to use the owner’s mobile micro network for free if the household or business wants to offer this. Otherwise, people and businesses can use the open roaming network which pays individual base stations micro fees for the data connectivity it provides. If no open roaming network provider is available, then any of the current 4 networks can be used. The idea is not very much different to what Ofgem is dealing with, where every business or household can choose to generate its own energy. Or what BT is doing with having a roamable WiFi endpoint on each BT modem.

Why would thousands of micro network operators be superior?

The telecom industry has not innovated in the last 15 years beyond deploying fibre and 4/5G. The restrictive planning permission laws in Britain mean deploying mobile base stations in cities is extremely onerous and slow. The model of paying for data plans is slowly moving towards £0. During its journey it will take operators from 4 to finally 1 if we do not make any radical changes. In order to start a communications and networking revolution, Ofcom can accelerate the path towards £0 data plans. Unlike Ofgem, where customers need to spend thousands of pounds in solar, wind and batteries, mobile base stations can be produced for some hundreds of pounds and on scale for tens of pounds. 5G networks work best with thousands of nodes in the network that transmit at high speed for short distances. By creating thousands or even millions of base stations over the UK, the network speeds and coverage will dramatically improve. By allowing businesses and households to form part of an open roaming network, they can offer others connectivity in exchange for base station and fibre connectivity fees being paid, and even run a small profit.

Millions of network modem and cloud apps

In a software-defined world, these thousands of fibre modems + neutral host base stations, can run network modem apps. These modem apps can talk to network cloud apps. Network apps are like mobile apps but instead of running on the mobile phone, they run either on the mobile base station or in the cloud. Why is this important? The value of data connectivity is getting very fast, close to £0. The value of customer network solutions is not. Parents want to be able to control if their kids can see TikTok or not. Businesses want to make sure their networks are secure. Software-defined radios can be used for WiFi and 5G but also for IoT and custom network protocols. Examples of IoT protocols are Zigbee, Bluetooth Low Energy, Z-Wave, Thread, Matter, Sidewalk, LoRA, NB-IoT, … Network apps could not only solve basic 5G connectivity and roaming issues but integrate with thousands of sensors and actuators. Home and office automation can be integrated into the network. Being able to warn home or office owners that a break-in is happening, a fire alarm was activated, an escape of water is occurring,... can save billions in losses and many human lives. Identity, proof of residency and other solutions are just an app away. Industrial IoT network protocols are possible. Completely new industries can be created if custom network protocols can be easily deployed on open roaming networks.

The UK FinTech revolution can be dwarfed by the UK ComTech revolution

The FCA’s sandboxes were one of the most critical instruments for new FinTech giants to be born in the UK. If Ofcom would use a similar concept to allow the testing of open roaming networks, then lots of new startups would be born in the ComTech space.

Decentralised Autonomous Organisations or DAOs can be used to manage network spectrum markets, roaming agreements, payment handling and many other aspects. These are smart contracts which run on public blockchains in a fully automated way. What this means is that the UK could launch the first decentralised telecom industry whereby there is no tech giant who controls the market. Instead lots of network apps licence spectrum, enable roaming and initiate payment transactions automatically. Payment providers can charge small fees if stablecoins are used [e.g. around $0.005/transaction is the current fee on public blockchains]. No more Apple or Google taking 30%. 

What this would do is to provide UK software houses with millions of opportunities to launch new revenue generating network apps. If you need to be registered as a UK company to launch a network app in the UK then this could be billions of new tax revenues. Afterwards these UK companies can export their apps to other countries. After Brexit, the UK is missing a world leading industry. #DeCom or Decentralised Communications can be that industry.

What about traditional telcos and the overall UK network security?

If nothing is done, the UK telecom operators are going to fire thousands of employees. Vodafone might even declare bankruptcy if it is not allowed to merge its businesses in the next few years. So not doing anything will not be good. 

By commoditizing the network and spectrum, Ofcom will oblige companies to focus on the value-add on top of the network. That is something telecom operators should have done decades ago. Moving bits from one point to another is not a differentiator. Opening the network to others will create more competition. Many of the ex-employees of UK telcos are likely going to be the winners when they can launch network apps because they have the knowledge and experience.

Will there be bad actors trying to steal money/data and bring the network down? Yes, they are called criminals. Any innovation will attract good and bad people. In an app economy however, trusted apps will soon flow up and bad apps can be easily flagged by the community. Companies can be scanning code and giving assurance about the safety of apps. At the moment we have thousands of devices in households and businesses which have code running in them that is insecure. In a world of Generative AI ransomware, those existing IoT devices can be targeted at unseen scale. By creating a network app economy, companies will be able to invest in keeping devices safe in the long run. Today, there is no revenue beyond the initial device sale, so many connected devices are ticking time bombs.

Conclusion: #DeCom can result in the UK ComTech Revolution and a large Tax Windfall

Failing telecom operators will want public money to rescue them. Letting operators merge from 4 to 2 or even 1, will result in UK citizens and businesses to start to pay a lot more for data than today. To avoid this scenario, Ofcom can go from 4 mobile network operators to thousands of mobile network operators and start a UK #DeCom Revolution. The only thing Ofcom cannot do is be slow. No telecom operator ever became market leader by copying innovators. They just wasted billions. Only telecom regulators that move fast, will get the innovators premium. Being the third telecom regulator to allow #DeCom means that most of the network apps will be imported, instead of exported. If we want to continue to see UK funds go to innovators like Apple, Google, Meta, Amazon,... then not doing anything or moving slowly is the best way. If as a nation, we want to be the #DeCom leader and start new industries, then speed and action are required.

One of your previous CTOs asked me to predict the future of telecom around four years ago in a private meeting to his team. My prediction was that satellite broadband would disrupt rural broadband, 5G was not going to be profitable and that if Ofcom started sandboxes like the FCA, the UK could be market leading. Nothing happened around the sandboxes, because you changed CTO and CEO. My next prediction is that the UK will be a telecom graveyard unless firm, transformative and quick action is taken. Please help me stop this prediction from happening...

P.S. For anybody else that reads this, Microsoft has been changing their LinkedIn algorithms and unless lots of interaction happens, it is unlikely that anybody at OfCom will read this post. So please like, share and comment, even telling me that all of this is wrong is better than silence. Your ideas might be better than mine...