What’s up with… AT&T, Airspan, shrinking telco capex

• AT&T customer data leaked on the dark web
• RAN vendor Airspan files for bankruptcy
• The global value of telco capital expenditure budgets is on the wane

In today’s industry news roundup: It’s red face time for AT&T as huge volumes of sensitive customer data is discovered on the dark web; Open RAN technology vendor Airspan is going to become a private company again after filing for prepackaged Chapter 11 bankruptcy proceedings; the total value of telecom operator capex budgets is shrinking as network operators put the brakes on their 5G investments, according to Dell’Oro Group; and more!

The personal data of around 73 million current and former customers of AT&T has been leaked on the dark web. The US operator has acknowledged the availability of the sensitive information, noting that a data set, which included personal information such as social security numbers, was released on the dark web around two weeks ago. It is unknown whether the data originated from AT&T itself or one of its vendors. “AT&T has launched a robust investigation supported by internal and external cybersecurity experts. Based on our preliminary analysis, the data set appears to be from 2019 or earlier, impacting approximately 7.6 million current AT&T account holders and approximately 65.4 million former account holders”, the company has stated. It further claimed that it currently does not have evidence of unauthorised access to its systems and that the incident has not had a material impact on its operations. Furthermore, AT&T noted it was communicating with those affected and will be covering credit monitoring where applicable. In an update on social media platform X (formerly Twitter), AT&T encouraged users “to remain vigilant by monitoring account activity and credit reports”.

Radio access network (RAN) equipment vendor Airspan, which became a listed company for the second time in 2021 as the result of a merger with a Spac (special purpose acquisition company), is to once again become a private company after filing for voluntary prepackaged Chapter 11 bankruptcy proceedings, it announced on 31 March. It has taken this rather ignominious route in order to implement a restructuring support agreement with “certain funds managed by Fortress Investment Group and several of its other key financial stakeholders to position Airspan for long-term success through up to $95m of new equity financing and the elimination of all the company’s existing funded debt.” The company expects to complete the current process during the next 30 to 45 days, all the while continuing to operate without disruption and “safeguarding its commitment to employees, customers, and suppliers,” after which it will become a “private company majority-owned by Fortress affiliates after receiving certain governmental and regulatory consents.” The vendor, which describes itself as a “provider of ground-breaking, disruptive software and hardware for 5G networks and a pioneer in end-to-end Open RAN, private network and air-to-ground connectivity solutions,” had high hopes for Open RAN-fuelled sales a few years ago but they never materialised. For the nine months to the end of September 2023, Airspan reported revenues of $71.2m, down from $125.6m for the same period a year earlier, and an operating loss of $49.3m compared with an operating loss of $60.3m a year earlier. The company’s stock was worth $10 per share when it listed in 2021 but each share is now worth just $0.11.

Global telco capital expenditure (capex) in 2023, including wireless and wireline investments, has contracted for the first time since 2017, according to new preliminary data from industry research firm Dell’Oro Group. The reason? Operators are now scaling back their investments in 5G. “The fundamental challenges have not changed. Operators have a fixed capital intensity budget and capex is largely constrained by the revenue trajectory,” explained Stefan Pongratz, VP and analyst at Dell’Oro. According to Pongratz, the situation is complicated by the size of the revenue pie which, in his words, remains fixed. “Following some positive developments amidst the peak of the Covid-19 pandemic, our analysis shows that operator revenue growth slowed in 2023 and has more or less remained stagnant over the past decade. And based on the guidance, operators, in general, are not overly optimistic that emerging opportunities with generative AI, edge computing, enterprise 5G, FWA [fixed wireless access] and 5G-Advanced will expand the pie,” he added. Dell’Oro, which recently noted that telecom technology vendor sales slipped by 5% in 2023, also predicted that market conditions will remain challenging in 2024 and that global capex is set to decline at a mid-single-digit rate this year. It also expects global operator revenues to increase at just 1% compound annual growth rate (CAGR) during the next three years. Find out more.

Telecom Italia (TIM)’s top team is set to come under pressure at the forthcoming shareholders’ meeting as some investors have proposed alternative board members, and even a new CEO, to the ones that the Italian national telco itself nominated previously. In March, the telco’s board, which has been under increasing pressure in recent years over its plans to reduce the company’s massive debt pile by selling its fixed access network (NetCo) and other assets, published its nominations for a new board of directors ahead of the planned shareholders’ meeting on 23 April. Those nominations came shortly after the operator’s CEO Pietro Labriola unveiled its new business strategy and noted that its debts might rise again even after the planned sale of NetCo. Now the operator has announced that some shareholders have proposed alternative board members and one has even proposed a new CEO who would replace Labriola: The shareholders’ meeting could get spicy… 

And to add further pressure on Labriola and his team, Elon Musk’s low-earth orbit (LEO) satellite operator Starlink has been criticising the Italian telco, complaining to regulator Agcom and the country’s industry ministry that Telecom Italia has been failing to comply with regulations that require it to share spectrum data so that Starlink can provision its technology with settings that avoid frequency interference, reports Bloomberg. Starlink says the telco’s lack of cooperation is holding up its service rollout, while Telecom Italia said Starlink’s account of the situation amounted to “a partial reconstruction of facts that doesn’t take into account ongoing discussions.”

Breaking cover and saying what many industry analysts and the technology media have been saying for a long time now, Demis Hassabis, the CEO (and co-founder) of Google’s AI research lab DeepMind, reckons the massive sums being spent on AI in general, and AI startups in particular, together with the billowing clouds of overhype that surround the reality of AI is “obscuring scientific progress” in the field and is fostering “some grifting”. The transitive verb, “grifts, grifting, grifted” is common parlance in the US and is defined by the Merriam-Webster dictionary as “to obtain (money or property) illicitly (as in a confidence game)”. In an interview with the Financial Times (subscription required), the newly knighted Sir Demis, said, “In a way, AI's not hyped enough but in some senses it's too hyped. We're talking about all sorts of things that are just not real.” Hassabis further commented that what is happening now in and around AI reminds him of “other hyped-up areas”, such as cryptocurrencies. With masterly British understatement, he added: “Some of that [crypto hype] has now spilled over into AI, which I think is a bit unfortunate… it clouds the science and the research, which is phenomenal.” Interest in generative AI (GenAI) is frenzied to the extent that financial data provider, PitchBook, reports that during 2023, speculators invested more than $30bn into 691 GenAI companies. Last month, the US Securities and Exchange Commission (SEC) settled charges against two investment advisers accused of making "false and misleading statements" about their use of AI. It’s the same old story: The arrival of new technologies generates hype and over-expectation fuelled by, shall we say, often questionable claims (and business practices) made by some companies as they seek to maximise their valuations. DeepMind was bought by Google in 2014 for £400m and is now a division of Alphabet, Google’s parent company (market capitalisation, $1.67tn), but has been maintained as a semi-autonomous individual unit based in London. It is focused on the development of artificial general intelligence (AGI) technology: AGI is commonly also called ‘deep AI’ or ‘strong AI’ and is based on a framework called “Theory of Mind AI” that underpins research into the training of machines to learn human behaviour and, through that, understand the fundamental aspects of consciousness. The hope (and concern) is that AGI will be able to plan, learn cognitive abilities, make judgments, handle uncertain situations, and integrate prior knowledge in decision making or improve accuracy. It is vastly different from GenAI, which is basically a regurgitation of immense masses of data (which often includes incorrect, partial or fake information) that has been scraped, sometimes illicitly, from the good and bad parts of the internet and held and disseminated, with minimal or zero checking, from huge server farms. DeepMind's mission, which is not low on the scale of global (and perhaps pan-galactic) ambition, is to “solve intelligence” and then use that “to solve everything else”. Thus it is using lessons learned from systems neuroscience and combining them with the latest developments in machine learning (ML) and computing hardware to create very powerful general-purpose learning algorithms that will help creation of AGI.

Test and measurement vendor Viavi Solutions, which last month announced an agreement to acquire industry peer Spirent Communications for £1bn, has reacted in a very measured manner to being outbid by rival Keysight Technologies, which is stumping up £1.16bn to buy Spirent. In a short statement, Viavi noted that it “believes that its acquisition represents certain value and notes its limited business overlap with Spirent relative to Keysight. Viavi believes that the proposed combination of Keysight and Spirent would further entrench Keysight’s leading position in many product segments, which would limit customer choice,” it added. That doesn’t much sound like fighting talk… the chances of a prolonged bidding war for Spirent appear to be fading fast.

Last week in the US, cybersecurity scientists and company officers from some major infrastructure and network operators spent two days testing their cyberdefence systems and defending against a persistent and very strong simulated attack by hackers attempting to take down their entire customer-facing operations. The exercise was billed as the first comprehensive, cross-sector cybersecurity exercise involving utility companies, the financial sector, telcos, DSPs and the US government. There have been many simulated attack exercises in the past, but they applied only to companies operating within the same industry sector. In this one, according to Axios, personnel from Mastercard, Lumen Technologies, AT&T, Southern Company and Southern California Edison gathered in Washington DC and spent Wednesday and Thursday fending off a sustained “real-time, real-life” cyber-incursion. The teams also included government officials from the Cybersecurity and Infrastructure Security Agency (CISA) and the office of Cybersecurity, Energy Security, and Emergency Response. In the exercise, representatives from private sector companies were split into two teams – the hackers and the hacked. Those from government departments played themselves. The main aim of the simulation was to build relationships and mutual trust between the participants that will be essential when (rather than if) a mass, simultaneous cyberattack across different sectors happens. As Jason Lish, Chief Information Security Officer (CISO) at Lumen technologies noted, “There's relationships that are going to be long-standing after this exercise.” Ron Green, the Fellow responsible for driving innovation in security at Mastercard, added: “You [can] come up with your plans sitting behind the desk with a nice cup of coffee and over cordial discussions, but if you haven't practised it and you go to test it in real life, you're going to find out where the kinks are and those kinks are going to hurt.” Recently the Biden administration has been revealing more and more previously classified information about attacks on critical infrastructure in the US and warning about state-originated long-standing and persistent cyber-campaigns against US infrastructure and interests by China, Iran, North Korea and Russia.

Chilean operator WOM has filed for Chapter 11 bankruptcy protection in the US, blaming the proximity of bond maturity dates, high interest rates and a difficult credit market as the main factors for what it dubs to be a “short-term liquidity” challenge. In a translated statement, the telco noted that the filing “does not imply the liquidation or bankruptcy” of the operator, stating that it would allow the company to continue operating and providing commercial services to more than 8 million customers while it works with its creditors and other stakeholders to access new financing sources for long-term business viability. WOM Chile further announced that JPMorgan had agreed to provide it with a $200m debtor-in-possession financing. According to a Bloomberg report, the bankruptcy filing comes as Chilean telco had been struggling to refinance a debt of US$348m due in November, and had also been facing fierce competition across Latin America. WOM is considered to be the third largest telco in Chile, behind Movistar and Entel, with a 21% mobile market share as of September 2023, as per the report.

The latest edition of FarrPoint’s Digital Connectivity Readiness Index (DCRI), a thrice-yearly analysis paper evaluating the degrees of connectivity preparedness across the four countries of the UK (England, Scotland, Wales and Northern Ireland), notes that while the availability of digital infrastructure has improved across Britain overall, progress in the adoption of the technology is patchy. The new DCRI report (published last month) from FarrPoint, an independent connectivity and smart technology consultancy company headquartered in the Scottish capital of Edinburgh, shows that England remains by far the best performing UK nation in terms of both infrastructure and adoption. Scotland comes a healthy second but adoption in Wales and Northern Ireland is not keeping pace with the other two home nations. The first such index was published last year and is designed to aid policy makers, digital service providers (DSPs) and other digital companies and organisations to understand their performance in terms of digital infrastructure and adoption relative to FarrPoint’s comprehensive benchmarking framework. It is derived from key metrics obtained from reliable data sources, including the UK regulator, Ofcom, and the UK’s Office for National Statistics. FarrPoint says the results are accurate and deliver real value and practical aid in the design of digital connection infrastructure, adoption and inclusion projects. The latest index figures show the UK’s headline readiness score has improved slightly since October 2023, rising by one percentage point from 84 to 85. At greater granularity, each of the home nations saw improvements in their overall score – England scored 87 out of a possible 100, followed by Northern Ireland, Scotland and Wales with scores of 81, 80 and 79 respectively. However, in addition to an overall score, the UK itself and each individual nation were also given sub-scores for infrastructure and adoption. All infrastructure scores improved but where adoption is concerned, the points stayed the same for England and Scotland but fell in Wales and Northern Ireland. England kept its top spot as the best performing country of the UK, both in terms of infrastructure (90) and adoption (84). The improvements have been driven by strong investment, network rollout of 1Gbit/s (gigabit) broadband services, and enhancements in 5G coverage. The adoption index for England indicates an increase in six out of eight key indicators, including advancements in digital skills and home Internet access. Scotland’s score for infrastructure (80) was just one point up on its October 2023 score of 79. The Index shows there has been some progress in the provisions of gigabit services and 5G in Scotland, but the scoring reflects the continuing challenges of deploying networks across remote rural regions. On the adoption front, Scotland’s overall score was 79. It did well on the digital economy, online wellbeing and security indicators but scores fell in the categories of digital skills and affordability. This was down to a shortage of skilled personnel (a point flagged heavily by Scottish businesses) and a rise in the number of people earning below the Living Wage who cancelled subscriptions to digital services. Wales has a market gap between infrastructure (81) and adoption (76) performance due to a three-point rise in its infrastructure score. Its adoption index also fell slightly. Wales did well on improved 5G coverage and a continued strong rollout of gigabit networks, but its adoption score was lower because of “affordability problems” (ie., they cost too much!) and a fall in the number of people working in digital during the period covered by the new report.  Finally, in Northern Ireland, there is still a significant difference in performance between infrastructure (89) and adoption (75). The high infrastructure score has been driven by continued public sector spending on Project Stratum, as well as commercial roll out. On adoption, it also performed strongly on many indicators but a small yet significant fall in public sector spending resulted in a downgrading in Northern Ireland’s score for accessible public services. This was accompanied by a fall in the security online indicator. Matthew Izatt-Lowry, senior economist at FarrPoint, stated: “Digital connectivity plays an increasingly crucial role in enabling economic growth, advancing progress towards achieving net zero goals, and enhancing social wellbeing. Our latest DCRI results show that all four UK nations have built upon their strong position to harness the full potential of digital, with overall headline scores increasing across all four nations. Because activity within the sector has largely focussed on the rollout of infrastructure networks, the results continue to be strongest on the infrastructure side. But without widespread adoption, this alone doesn’t yield any tangible benefits for households, communities or business.” And there’s the rub.

ZainTECH, the digital solutions provider of Kuwaiti operator Zain, has expanded its partnership with Amazon Web Services (AWS) to help regional organisations accelerate their digital transformation plans. The company has expanded its AWS cloud offering by acquiring Citrus Consulting, a consulting and transformation services company, from technology solution provider Redington. According to Zain, this will enable its tech division to help enterprise customers in the region maximise their return on investment (ROI) from cloud technologies and accelerate time-to-value from AWS investments. Andrew Hanna, CEO of ZainTECH, claimed this step will help the company bolster its position as “a leader in the cloud services domain, directly aligned with our mission to accelerate the digital transformation journey for businesses across the region”. Read more.

- The staff, TelecomTV