What’s up with… Altice, FCC, VMO2

• Patrick Drahi’s Altice makes progress with its M&A efforts 
• US gets new high-speed broadband benchmarks
• Virgin Media O2 takes smart approach to mobile coverage

In today’s industry news roundup: Patrick Drahi’s Altice is offloading its media unit and is edging closer to the sale of its Portuguese operations as it seeks to erode its debt pile; US regulator the FCC finally drags its high-speed broadband benchmark numbers into the modern age; UK operator Virgin Media O2 is in pole position to densify its 4G and 5G networks; and much more!

Patrick Drahi’s Altice France has entered into exclusive talks with shipping and logistics giant CMA CGM regarding the sale for €1.55bn of its TV, radio and digital media unit Altice Media, which includes the BFM TV news channel and RMC radio station and which generates revenues of €362m per year. CMA CGM’s billionaire chairman, Rodolphe Saade, is building a portfolio of media assets, so the move fits his firm’s strategy. For Drahi, the sale is part of the ongoing efforts to reduce the Altice Group debt pile, which at about €24bn is weighing heavily on the company’s balance sheet. There are multiple Altice assets up for grabs currently, including Altice Portugal, the Iberian country’s national telco. Speaking of which…

A consortium headed up by private equity firm Warburg Pincus has reportedly dropped out of the bidding to acquire Altice Portugal, according to local business news site Jornal Economico, leaving Saudi telco STC and Xavier Niel’s expanding telecom empire Iliad in the running. Jornal Economico reported that STC might need to find local partners if its bid is to pass the scrutiny of local and European regulators, which are increasingly sensitive about the sale of significant assets to companies outside of the European Union. And as we’ve reported recently, STC appears keen to build itself a portfolio of communications network assets on the Iberian peninsula.  

After years of talk and shilly-shallying about upping broadband benchmark speeds in the US, the national telecoms regulator, the Federal Communications Commission (FCC), has at last enacted an increase. Until last week, the “goals” for broadband speeds were an unimpressive 25Mbit/s downstream and a miserable 3Mbit/s upstream, rates that were set back in 2015 (the equivalent of the Bronze Age of the broadband era). Now, the FCC has announced, the “benchmark for high-speed fixed broadband” has been set at 100 Mbit/s for downloads and 20 Mbit/s for uploads, “a four-fold increase” from the previous benchmark. These new and aspirational rates are still far from earth-shattering but, when (and if) they are achieved nationwide, it will mark an appreciable improvement for many broadband users. That’s because, as the FCC admits and accepts, far too many rural areas across the US still cannot access decent broadband or, in some cases, any broadband services at all. As the FCC puts it, “high-speed broadband capability [is] not being deployed in a reasonable and timely fashion.” The FCC also set the “long-term goal” for ISPs, DSPs and telcos to deliver 1Gbit/s downstream and 500 Mbit/s upstream: However, the timeframe for all subscribers to arrive in the sunny uplands of the US broadband nirvana is not disclosed, so it could be a generation before that happens. Since the old target was set 9 years ago, the FCC has often discussed increasing broadband benchmark speeds but, until now, has not taken any action. What is particularly interesting about this latest development is that the regulator has, for the first time, used its own Broadband Data Collection figures rather than relying on data from service providers that contained only partial, incomplete and misleading numbers. The new FCC report shows that, as of December 2022 (which is almost 16 months ago but is the latest data available), fixed terrestrial broadband services (excluding satellite) had not been physically deployed to some 24 million US citizens, including almost 28% of those in rural areas and more than 23% of people living on tribal lands. Furthermore, 5G mobile coverage has still not been physically deployed at the previous benchmark speeds to 9% of all Americans, to 36% of Americans in rural areas, and to more than 20% of people living on Tribal lands. It also noted that, as of the end of 2022, about 45 million US citizens lacked access to services capable of achieving the new benchmark speeds. However, on the upside, the report finds that 74% of US school districts currently meet the short-term schools and classrooms benchmark of 1 Gbit/s downstream access per 1,000 students and staff. The FCC says its new “fixed speed benchmark for advanced telecommunications capability” is based on standards now in use by multiple federal and state programmes, including the National Telecommunications and Information Administration (NTIA)’s Broadband Equity, Access and Deployment (BEAD) Program; on consumer usage patterns; and, last but obviously by no means least, on what is actually available from, and marketed by, service providers.

Virgin Media O2 (VMO2) has conducted a trial in which it deployed 4G and 5G smart poles on top of its fibre network. As part of the test, which was conducted in collaboration with shareholder Liberty Global, smart poles were installed beside VMO2’s existing national fibre network cabinets, to boost mobile coverage in local areas. To power the poles, electricity was supplied by Virgin Media’s fibre network rather than a traditional power supply, and this was enabled by “innovative ‘digital electricity’ technology, which transmits power from on-street cabinets in the local area along fibre optic cables,” the company explained in a statement. According to the UK operator, the poles are much smaller than traditional mobile phone masts and do not require planning permission, while they are also said to reduce costs and complexity by negating the need for a separate backhaul connection or dedicated power supply. VMO2 explained it currently operates around 25,000 street cabinets across the UK that could potentially power the new smart poles, and that smart city infrastructure, such as electric vehicle (EV) chargers, could also be built into the poles – similar to an idea that is already being realised by rival domestic operator BT – see BT gets streetwise for the EV era.

Japanese telco SoftBank has announced a joint development project with Microsoft Japan to introduce generative AI (GenAI) to its call centres. The project will be rolled out gradually starting in July and will see certain call centre operations automated in a bid to improve customer satisfaction by reducing waiting times and unifying responses. The operator plans to use large language models (LLMs) mainly for tasks such as providing guidance for customer inquiries related to contract details and procedures around making changes in a contract. The company explained that it has already started trialling GenAI at its call centres, as part of its initiative to introduce “cutting-edge technology” into its business and internal operations that it began in February 2023. You can read more about the project with Microsoft in SoftBank’s statement, available here in Japanese.

It’s all happening in El Salvador, the first country to adopt bitcoin as legal tender. The Central American country’s Asemblea Legislative (Legislative Assembly) has just voted to cut income tax on foreign investments and remittances from 30% to 0% – and there are no restrictions on the amounts involved. Additionally, the president, Nayib Bukele, has ordered what he called a “big chunk” of the country’s bitcoins to be moved over to a so-called Cold Wallet (a crypto wallet that does not connect to the internet or interact with any smart contracts, securing it from cyber threats) that will be kept, safe and sound apparently, in a “physical vault” (the mind boggles!) on El Salvadorian territory, Reuters has reported. It seems a strange thing to do, considering that bitcoin is a virtual currency and has no physical existence, but still… Recently re-elected for a second term as president, Bukele, who first won power in 2019, wants El Salvador to become a tax-free haven and technology hub that will encourage big multinationals and other high-tech companies to set up shop there. Bitcoin is the world’s first decentralised cryptocurrency: Nodes in the peer-to-peer bitcoin network verify transactions through cryptography and record them in a public distributed ledger, the blockchain, without central oversight. It’s very different to traditional banking and financial processes and the price of bitcoin can be, and frequently is, extremely volatile. Nonetheless, in 2021, Bukele ordained Bitcoin to be legal tender and added 200 bitcoins to the national treasury. Whether coincidentally or not, El Salvador’s economy has been growing steadily since 2019. The World Data Bank says its gross domestic product (GDP) was US$24.9bn in 2019 and rose to $32.4bn in 2022, the last year for which full figures are available. The World Bank forecast had El Salvador’s GDP set to grow by 2.8% last year. In 2023, El Salvador imposed a 15-year moratorium on regulations related to technological innovation, including income, property and capital gains taxes as well as import duties. The changes are covered in “The Law for the Promotion of Innovation and Technology Manufacturing”, which covers areas such as software and application programming, AI, and computer and communication hardware manufacturing​​​​, with the intent of attracting global talent and investments and boosting the living standards of El Salvador’s population, which was estimated to be 6.5 million last year. In a posting on X (formerly Twitter) last Thursday, Nayib Bukele announced that El Salvador’s bitcoin collection is worth $407m and has yielded some $85m in profits. Last week, the virtual currency’s value shot up to $73,800 per bitcoin. Bukeke wrote, “It’s not much but it’s honest work.” The decision to make bitcoin legal tender was treated with derision and contempt when it was announced. The International Monetary Fund (IMF) which, at the time, was in the process of negotiating a loan (which entailed, as is usual, some swingeing conditions) to rescue El Salvador’s battered economy, was particularly scathing, calling the decision “pure folly” and “economically dangerous for developing countries.” The country’s decision was particularly puzzling and unexpected given that, back in 2001, El Salvador had adopted the US dollar as legal tender to ensure the monetary stability that the country’s national currency, the colón, could not. That reform worked and the country’s annual inflation rate fell from a consistent 10% and more, year after year, to 2% by 2012 and, by 2018, it was close to zero. It remains to be seen if the bitcoin policy will work out well in the long term. Meanwhile, Bukele’s plans for compute-intensive (and therefore energy hungry) bitcoin mining in El Salvador, to be powered by limitless volcanic geothermal energy, remain stymied. The site picked for the location of ‘Bitcoin City’ – El Salvador’s equivalent of El Dorado – shows no sign of development and remains virgin jungle. 

- The staff, TelecomTV