What’s up with… NTT Docomo, Vodafone & Three, UScellular

• NTT Docomo eyes global expansion
• Vodafone UK and Three get security green light for merger
• T-Mobile US and Verizon circle UScellular

In today’s industry news roundup: Japanese telco NTT Docomo is to pitch its services to the world with a new division; the UK government gives its conditional love to the Vodafone-Three merger; T-Mobile US and Verizon are reportedly eyeing UScellular asset options; and much more!

Giant Japanese mobile operator NTT Docomo has cemented its international ambitions with news that it is forming a new global subsidiary that will market its network technology and digital applications around the world. NTT Docomo Global, which is set to start operations in July, will work with local partners to offer up a portfolio that will include the company’s Web3-based (blockchain) payment services, its AI-enabled Data Marketing Platform (DMP), the Open RAN-based products and professional services of its Open RAN Ecosystem Experience (Orex) unit and its space-based non-terrestrial network (NTN). The inclusion of the Orex portfolio will require approval from Japanese vendor giant NEC, with which Docomo recently formed an international joint venture. The new global subsidiary will develop its geographical markets “in line with its phased growth, focusing on South-east Asia and North America as markets with size and growth potential for the application services in the first phase, and then [on] Europe and the Middle East thereafter,” noted Docomo in this announcement. NTT Docomo has long flirted with the concept of taking its in-house technology and expertise to the international market, but such a move requires a significant effort and investment, as Rakuten Mobile has found with the launch and development of its Rakuten Symphony division. Now, with the NEC joint venture and the formation of NTT Docomo Global, the Japanese operator looks like it is jumping into the global market with both feet and it’s unlikely to be the last to do this – TelecomTV has been waiting with bated breath for some time to see how bold India’s Reliance Jio, which has many telecom software stacks and lots of 4G and 5G expertise within its four walls, might be on the global stage.

Vodafone UK and Three have cleared one of the major hurdles en route to their planned £15bn merger. The UK government has concluded its security review of the proposed consolidation and given the go-ahead but with conditions attached. The approval was granted under the terms of the 2021 National Security and Investment Act, which empowers the government to scrutinise and intervene in certain acquisitions that may be deemed to have the potential to harm Britain’s national security. The legislation applies to proposed mergers or buyouts of companies that fall within a list of acquisitions of “certain entities in 17 sensitive areas” of the UK economy. These ‘notifiable acquisitions’ include AI, data infrastructure, telecoms, computing hardware, cryptography, quantum, and satellite and space technologies. Following completion of a detailed national security audit, the UK Cabinet Office has issued a “Final Order” permitting the merger to go ahead subject to the acceptance of conditions that include the merged entity being required to institute a “National Security Committee” to “oversee sensitive work”. The condition reflects continuing concerns over Three’s links with China, given that the telco is owned by the Hong Kong group CK Hutchison. Furthermore, once Vodafone UK and Three have merged, the resulting company will be required to establish a technical group under the aegis of the National Security Committee  to monitor and provide the government with detailed regular reports on a list of topics relating to cyber, physical and staff security. The two mobile operators will also need to ensure their network migration planning is reviewed by an external, UK government-approved auditor. But while the government has given its conditional approval, a bigger hurdle remains, as a separate and in-depth probe into the deal by the UK’s Competition and Markets Authority (CMA) is ongoing. The regulator is particularly concerned that both Vodafone UK and Three have consistently failed to provide antitrust guarantees that the UK’s competitive mobile comms environment will not be reduced or harmed when the number of the country’s big four mobile networks are reduced to just three. The CMA also wants binding assurances that reduced competition caused by sector consolidation will not result in increased prices for all UK mobile subscribers, not just the 27 million that will become Vodafone/Three customers once the deal is done and the new entity becomes the biggest mobile operator in Britain. In a joint statement, Vodafone UK and Three noted: “We strongly believe [the merger] will strengthen competition in the UK’s mobile sector and enable a significant step-up in the UK’s mobile network infrastructure.” The claim is that the merger will result in an additional £11bn being invested in the UK. We’ll see. When it is complete, Vodafone will own 51% of the combined new entity and CK Hutchison will have a 49% share. Another area of concern that will arise will be the potential number of job losses. Hitherto, Vodafone and Three representatives have stated it is still “too early” to discuss them. 

T-Mobile US is in discussions to acquire part of UScellular, the country’s fourth-largest mobile operator, for about $2bn, while Verizon is considering an offer for other UScellular assets, according to a report from The Wall Street Journal (subscription required). The news lit a fire underneath UScellular’s share price, which leaped by $9.96, almost 28%, to $45.95 in Thursday trading on the New York Stock Exchange, giving the operator a valuation of $3.9bn. Chicago-based UScellular, which is majority owned by Telephone and Data Systems (TDS) and which has been considering its strategic options (including a trade sale) since last August, is a minnow compared with the three main mobile operators in the US (AT&T, T-Mobile US and Verizon) and is shrinking: It ended March with 4.05 million postpaid customers, down from 4.22 million a year earlier, and 436,000 pre-paid customers, down from 470,000. Its first-quarter revenues totalled $950m, down 3.6% from a year earlier, though its operating income nearly doubled year on year to $51m.

The US national telecom regulator, the Federal Communications Commission (FCC) has published the final, definitive text for its new net neutrality regime. The latest version closes loopholes that could have allowed premium-priced traffic prioritisation via “fast lanes” for consumer users and would have resulted in lengthy and expensive lawsuits. In April, the FCC voted to reinstate the Obama-era net neutrality rules that were repealed during the Trump administration. In essence, the new regulation reclassifies internet access as a “common carrier” service under Title II of the Telecommunications Act of 1934 as amended in 1996. It means internet service providers (ISPs) and telcos must treat all mass market traffic equally and be prohibited from ‘throttling’ it. However, one of the essential aspects of 5G architecture is network slicing, whereby multiple virtual networks can be created using common physical infrastructure. Thus, each slice of a network, based on the needs of a specific application or customer, can be provisioned with varied levels of latency and data throughput. In other words, by its very nature, 5G standalone (5G SA) network slicing would provide for the creation of premium-priced fast lanes that the new FCC net neutrality regime is designed to obviate. That possibility seems now to have been negated. The text of the new FCC order has it that: “We clarify that a BIAS (broadband internet access service) provider’s decision to speed up ‘on the basis of internet content, applications, or services’ would ‘impair or degrade’ other content, applications, or services which are not given the same treatment.” As a result of the FCC’s action, service providers will be unable to offer their consumer customers preferential treatment to certain apps or services. Prior to the FCC’s loophole-closing exercise, service providers were preparing to offer various categories of new, and expensive, fast lanes for services, such as videoconferencing, gaming and video, on the grounds that standalone 5G network slicing was not covered by the new FCC net neutrality regime. Standalone 5G refers to systems that use a 5G core platform that enables network slicing services. Barbara van Schewick, professor at the Centre for Internet and Society (CIS) at Stanford Law School in California, was one of the first academics to argue that, as things stood, the FCC’s reinstatement of network neutrality had sufficient inadequacies and ambiguities within it to allow mobile carriers to create data fast lanes. She said the now-revised wording “means an ISP can’t provide preferential treatment to select apps or categories of apps, such as providing more bandwidth, reducing delay, or guaranteeing quality of service. The new order has brightline rules that prevent blocking, throttling, and paid prioritisation, and it ensures that ISPs can’t use new tech capabilities to create unfair fast lanes that favour particular apps or kinds of apps. This is a win for competition, innovation, and free speech.” Many service providers will fundamentally disagree with that claim – many consumers will not. It should be noted, though, that enterprise services and private wireless networks are not regarded as mass market offerings and thus do not fall under the net neutrality rules, so enterprise-focused network slicing-based services will not be impacted by the reintroduction of net neutrality regulations. 

Ericsson is searching for a new chief for the MEA region after Fadi Pharaon, currently the vendor’s senior vice president and head of market area Middle East & Africa, resigned to “pursue other opportunities”, the company announced. Pharaon, who has held his current position since 2019 but has been with Ericsson for 26 years, will leave the company at the end of August.

Verizon has beefed up its private network portfolio by adding a private 5G platform from Nokia to its offerings. The US operator noted that it has completed the first phase of certification to add Nokia Digital Automation Cloud (DAC) to its list of supported solutions in private networks that use Verizon’s spectrum. The move will expand the hardware and software options it can deliver to businesses, and will enable enhanced indoor coverage for both consumers and enterprise customers, according to the telco. Once fully certified, Nokia’s platform will also be in production and available for trials in Verizon’s innovation labs. Praveen Atreya, VP of technology and planning at Verizon, said private mobile networks have become “an integral part of digital transformation for modern enterprises, and we are committed to developing new offerings and advancing the technology that enables private 5G networks to drive efficiency and profitability for our customers.” Read more.

Japanese operator KDDI has moved its group-wide goal to become net zero forward by 10 years. In a statement, the telco noted that the KDDI Group now aims to reach carbon neutrality by the end of fiscal 2040, instead of the earlier goal of 2050, which it set itself in 2022. To achieve the new targets, the company intends to boost its use of electricity from renewable sources, such as solar power, and plans to use its businesses and assets “to collaborate with partner companies to help customers and society at large go net zero.”

The internet of things (IoT) market is going from strength to strength, according to the latest report from Transforma Insights. At the end of 2023, there were 16.1 billion active IoT devices around the world, a figure that is expected to rise at a compound annual growth rate (CAGR) of 10% to 39.9 billion by 2033. The analyst firm also suggested that annual device sales will grow at a CAGR of 8% from 4.1 billion in 2023 to 8.7 billion by 2033. Meanwhile, cellular IoT connections are set to grow from 1.9 billion at the end of 2023 to 7.5 billion in 10 years’ time. In 2023, the total IoT market was worth $335bn in global revenue, taking into account connectivity modules, value added connectivity and core associated applications. Revenue is set to nearly triple, hitting $934bn in 2033. By that time, the consumer sector is forecast to represent 61% of all IoT connections, while in the enterprise field, some 35% of devices will be accounted for by ‘cross-vertical’ use cases, such as generic track-and-trace, office equipment and fleet vehicles. Another 24% of enterprise connections will be used in the utilities sector, most prominently smart meters, and 22% – by retail/wholesale (predominantly payment processing devices and electronic shelf labels). Find out more. 

- The staff, TelecomTV