• Has SpaceX taken advantage of LEO rivals?  
• EC lines up €865m of 5G and other digital investments 
• Xavier Niel’s Ukraine operation gets financial support 

In today’s industry news roundup: Elon Musk’s SpaceX has been accused of abusing its market power to the advantage of its Starlink operation; the European Commission has apportioned €865m for digital infrastructure investments over the next four years; Ukraine’s newly merged, converged telco gets EBRD and IFC support; and much more!

Elon Musk’s SpaceX is coming under scrutiny for allegedly abusing its position as the leading rocket launch provider to persuade satellite constellation rivals to share their spectrum rights with SpaceX’s Starlink low-earth orbit (LEO) broadband satellite network, according to a report by the Wall Street Journal (reports Interstellar News). According to the journal’s sources, SpaceX asked companies such as Canada’s Kepler Communications and OneWeb, now part of the Eutelsat Group, to share their spectrum rights before agreeing to launch their equipment, a strategy that has raised concerns that Musk’s company is leveraging its position to gain an unfair advantage in the satellite broadband services sector. According to the report, lawyers representing the satellite firms have met with the US Department of Justice (DoJ) to discuss whether SpaceX’s tactics amount to an abuse of market power. 

The European Commission is to pump €865m into Europe’s digital connectivity infrastructure in the 2024-27 period to help “foster” public and private investments, it announced this week. “Improving Europe’s connectivity infrastructure is fundamental for achieving Europe’s 2030 Digital Decade objectives to connect all citizens and businesses with 5G and gigabit connectivity.” The EC’s Connecting Europe Facility (CEF) Digital work programme will support 5G rollouts and the “integration of edge cloud and computing capabilities in vertical sectoral applications, such as health, manufacturing, transport, and logistics”, and the deployment and upgrade of “backbone networks, including quantum communication networks and submarine cables, to increase the performance, resilience and capacity of connectivity networks within and between Member States, as well as between the Union and third countries.” It will also support the deployment of “operational digital platforms for transport or energy infrastructures, by optimising the energy use of information and communication technology (ICT) and reducing its environmental impact. These operational digital platforms will build on and integrate with existing and emerging European data, cloud and edge computing, and connectivity infrastructures, funded by the Digital Europe Programme and Horizon Europe.” 

The European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC) are co-funding Ukraine’s newly merged telecom company, formed in September following the completion of two acquisitions by Xavier Niel’s NJJ Holdings, with loans to the tune of $435m ($217.5m each). It is the biggest direct foreign investment in telecoms since Russia invaded Ukraine in February 2022. It is particularly ironic that, even as the war in Ukraine continues to grind on after 32 months of remorseless bloodshed and destruction, the EBRD was established in the immediate aftermath of the collapse of the Soviet Union with the remit to help build post-Cold War economies in central and eastern Europe by furthering progress towards “market-oriented economies and the promotion of private and entrepreneurial initiative”, which is long-winded way of describing capitalism. First mooted by French President François Mitterrand in October 1989, the EBRD was established very quickly and, headquartered in London, became operational in April 1991. Since then it has invested more than €190bn in more than 7,000 projects. The IFC, headquartered in Washington DC, is a member of the World Bank Group focused on the private sector in emerging markets. Last month a consortium of investors led by French billionaire Niel announced that the deal to acquire and merge the Ukrainian mobile operator Lifecell with service provider Datagroup-Volia had been completed. Datagroup has national fibre infrastructure assets across Ukraine while Volia, which merged with Datagroup back in 2021, was/is the country’s leading pay-TV and broadband service provider. As reported by Reuters, Holger Muent, the EBRD’s director of telecoms, media and technology commented, “This is the game changer. It will create the second-largest operator of that kind in the country and that leads to higher speed, better coverage, lower energy consumption for the network, and more redundancy in the network as well.” Makhtar Diop, the managing director of the IFC added, “By strengthening digital connectivity and network resilience, we are delivering a vital service to millions of Ukrainians while reaffirming our commitment to the country. It sends a strong message to global investors about the resilience and significant potential of Ukraine’s economy.” The biggest service provider in Ukraine is Kyivstar, which is owned by Veon. The Kyiv School of Economics (KSE) estimates that Ukraine’s losses resulting from the Putin regime’s unprovoked and illegal invasion now stands at $1.164tn and mounting. The KSE also calculates that damage and losses to Ukraine’s telecom systems, digital infrastructure and IT assets amount to $19.3bn and rising. Obviously, investing in Ukraine in wartime is a very risky business and thus part of the payments made by the EBRD and the IFC are hedged by guarantees provided by both the government of France and the European Commission (EC).

South Korean operator KT Corp. has put more flesh on the bones of its five-year strategic partnership with Microsoft, which was announced at the end of September. According to the Korea JoongAng Daily, reporting from a media briefing in Seoul on Thursday, KT’s CEO, Kim Young-Shub, said the partners will invest 2.4tn Korean won ($1.77bn) over the next five years, with half of that total allocated to datacentre infrastructure and graphic processing unit (GPU) investments, while the other half will go towards R&D as well as marketing and developing the Korea-customised AI models. The two companies noted in September that they plan to jointly develop “customised AI models and services tailored for Korea”, and the CEO noted today that the partners aim to complete the development of a Korea-customised version of the OpenAI’s ChatGPT generative AI (GenAI) application (specifically GPT-4o) by the second quarter of 2025 (Microsoft is a major investor in OpenAI). The CEO also noted that KT and Microsoft expect the partnership to generate 4.6tn won ($3.4bn) of revenues over the next five years. “Microsoft understands the operational mechanisms of enterprises better than any other company,” Young-shub stated. “Our discussion with Microsoft, which began in December of last year, has only strengthened this belief. Microsoft’s capabilities in AI development are unrivalled,” he added. 

A new independent study conducted by Dstream Group on behalf of DE-CIX, a global internet exchange operator, finds that the US is steadily moving toward a datacentre and carrier neutral framework to support burgeoning AI and cloud-based applications. Some 80% of all internet exchanges (IXs) in the region are now datacentre and carrier neutral. A major knock-on effect of booming generative AI is the ever-increasing demand for storage capacity that is spurring the construction of massive new datacentres around the world, and the new study shows that, on average, carrier-neutral platforms have four times more datacentres from a range of operators connected to the platform than other IX models. This provides both operators and enterprises with a wider and better choice and improved resilience for low-latency, edged-based connectivity. Furthermore, operated by independent specialists and distributed over datacentres from multiple operators within a city or region, neutral IXs provide more access points and bring together more networks than the previously prevailing model of carrier-operated IXs. Of the top-50 largest IXs in the US, 35 (70%) are neutral and thus de facto proof that network operators prefer that model. Commenting on the new report, Ivo Ivanov, the CEO of DE-CIX said,  “The past decade has demonstrated the immense value of the neutral and distributed model for driving digital growth in the US market. The study shows that these IXs, which follow the European model of neutrality, are not only future-proof but essential to support the emerging needs of cloud computing, AI, and IoT [internet of things] to enable extremely low-latency connectivity for critical current and future use cases.” The detail of the report shows that of the top-50 US-based IXs, distributed and neutrally operated internet exchanges have an average of 11 connected facilities operated by at least two independent datacentre operators within a metropolitan area, while carrier-operated IXs have an average of three facilities operated by a single operator within a metro area. Greater operator diversity and geographical distribution within the metro area allows companies freedom of choice of datacentre operators and brings interconnection closer to end users, reducing latency and improving connectivity performance. As Serge Radovcic, co-author of the report, points out, “The distributed, independently operated IX model has several significant advantages for building digital ecosystems. The neutral model can potentially be accessible from all colocation datacentres within a metro area – and even from outside of the metro area. By leveraging connectivity to multiple datacentre operators, an IX can eliminate the risk of vendor lock-in, and make it easier to establish redundant connections, increasing the resilience of connectivity for critical use cases.” The report also shows that neutral IXs foster the creation of collaborative ecosystems by connecting various datacentres and aggregating networks. 

MTN Consulting has just released the second-quarter 2024 iteration of its Telecoms Biggest Vendors report. The headline news is that the rate of decline in vendor market sales has “moderated” to 3.4% overall as the tentative first recovery reported by Huawei was maintained during the second quarter and looks somewhat more solid in the longer term. This, the report has it, provides the basis for “cautious optimism” for the second half of 2024 overall. The research firm assesses the performance of technology vendor revenues in the telecom vertical sector across a wide range of company types and technology segments (including a range of supporting services, it seems), which it refers to generally as “telco network infrastructure (Telco NI)”. According to its analysis, Telco NI vendor revenues hit $53.3bn in the second quarter of 2024, down by 3.4% year on year. The value of the market for the 12 months to the end of June this year stood at $205.7bn, down 8.9% compared with the previous 12-month period. The report credits Huawei with being the prime mover behind the sectoral improvement and shows that when the Chinese company’s better numbers are excluded from calculations, the total vendor market actually declined by 7.3% in the second quarter and by 11.2% for the 12-month period. Much seems to be riding on Huawei maintaining and further extending the improved performance it has achieved over the past three consecutive quarters and into 2025 and beyond. The top-three Telco NI vendors are, as usual, Huawei, Ericsson and Nokia. Between them, they accounted for 40.3% of the market in the second quarter. Two other Chinese companies, China Comservice (a subsidiary of China Telecom) and ZTE have been slugging it out between them for fourth and fifth place in the rankings since 2019 and remain distant also-rans, way down the field behind the top three. In terms of year-on-year revenue growth the top three were India’s Tejas Networks (courtesy of the 4G rollout undertaken by state-owned operator BSNL), Broadcom (courtesy of its acquisition of VMware) and Alphabet (thanks to the improved penetration of the telecom vertical by Google Cloud). As far as future spending is concerned, MTN Consulting has it that telco capital expenditure (capex), which is the main driver of the Telco NI market, will fall from the $315bn achieved in 2023 to between $295bn and $305bn in 2024. However, there is a silver lining, as the research firm expects telco capex to recover from 2025 and be valued at $331bn in 2028.

– The staff, TelecomTV