In the beginning, telephone service was very simple. A monopoly service provider provided us with dial tone, and we could call another subscriber (not customer in those days) and talk. Things have changed a lot since then of course, mainly in the last 37 years since telecommunication services were liberated and BT privatised. Another major change is looming. Openreach (the access network arm of BT) tell us that they will switch off the Public Switched Telephone Network (PSTN) in 2025*. That’s nice of them to let us know and be quiet you cynics who say they thought it had already been switched off. Really this has been coming for years and it just means technology dictates that we no longer need a telephone exchange controlling and switching calls between fixed (wired) devices and – as we all hope – we see old copper wires replaced with fibre optic glass. We read that as many as 40% of people in the UK no longer even use their ‘old’ wired phone preferring to use their mobile device or an internet-based voice application. The internet will be the platform for all telecoms in the future and the future is here right now.
All this is driven by economics as that old telephone exchange isn’t cheap to maintain and operate and although engineers have worked minor miracles in ‘stretching’ copper to increase bandwidth for data applications, a step function change was needed, and fibre optics fits the bill. Now any licensed operator can provide telecoms services but the cost of putting fibre into homes and businesses isn’t cheap. Without direct financial support from governments (as we seen happening in many parts of the world) the pace of the switch from copper can be slow as a plc has to make the finances work and the capital bill is very high indeed. This is perhaps one reason why the UK lags the rest of the developed world in fibre access. The recent decision by Ofcom to allow Openreach to charge other service providers what they like for wholesale access – as opposed to the previous capped rate – seems to have given BT a new lease of life and appetite to finally go big on fibre.
So, this got us thinking at Azenby about what we want from a new modern, liberated, open telecommunications market and from a UK perspective, how will Global Britain shape up outside of the EU?
I think we need to start by remembering that it was, somewhat perversely, a European collaborative programme largely lead by the UK that led to the first real paradigm shift in global communications, GSM or 2G as it later become known. That all seems like ancient history in the Brexit world, but GSM became the first global standard for mobile communications and is still the bedrock of all mobile services today. 5G can trace it roots right back to GSM. The formation of GSM included the specification of the services to be carried over the technology. That seemed a very natural thing to do for the forefathers of GSM as they were – all bar one – existing PTTs with very much a carrier mindset.
The services were simple enough, voice calls, call forwarding, call barring, call waiting, but enough to kick-start the mobile market. There was data service as well called short message service which very few in the mobile operator world believed in at the time and perhaps tells us much about how PTTs viewed new services (or didn’t in this case!).
Then the revolution happened. We are still not sure if it was intended or a victim of the laws of unintended consequences. When the work for specifying the next generation of mobile services began, a coming together of global standards bodies happened to create the Third Generation Project Partnership (3GPP). A very good thing it was with an ambition to drive economy of scale in network equipment and devices, both of which were paramount to making mobile affordable and globally accepted.
One thing that 3GPP also did though was to decide that the standards group would specify only at the bearer level and that services would be left to the service providers to decide on. This had some merits as it was intended to lead to innovation in new services and allow service providers to differentiate themselves in the marketplace which it clearly did but not from the Mobile Operators.
It also meant that no one even thought about how 3G would deal with something as simple as a voice call, after all, a voice call is a service! Cue mass panic in the operator environment and a scramble to try and get voice over IP working.
Whether this ditching of services was a result of MNOs sleeping on the job at the standards body or part of a greater master plan of which we still haven’t seem come to fruition, the genie was out of the bottle and mobile operators slowly became the dreaded dumb pipe and services were applications provided by others and the rest is history.
Coming right up to date now our mobile usage is made up of three components. Buying a cellular access bundle, getting hold of a device, and using applications for services. Voice is an application supplied by the mobile carrier but also available through many other apps as well, the mobile device can use other wireless connections and for some users, WiFi is the default as it’s often regarded as free, and with this the relevance of the mobile operator diminishes.
So, what does all this tell us about what will happen after the great PSTN switch off? Most likely our internet service provider is probably just the access provider, and we use whatever devices and applications we chose. Fixed wireless conversion finally happens. They are both simple transparent access technologies which isn’t how mobile operators and Telcos planned it.
The big question is what do we, the customer, want from this new era of telecommunications if anyone bothered to ask us? We’ve been thinking about this at Azenby and accepted that the market will continue to be the ‘over-the-top’ model with carriers fighting an access battle and application providers fighting for services and gaining the lion’s share of the revenues. Given the money follows through the services, not the access, it’s no wonder that we are now in the era of the tech giant, and the once almighty PTTs are a way off the top of the food chain. For access we want speed (actually we seem to want to more speed from our broadband than we know what to do with), reliability, universal coverage, and a low price. Access is a commodity following the utility model. We take access for granted because what’s important is the services (apps) we want to use.
There are millions of apps out there and we are free to pick and choose whatever ones we want. What’s wrong with that? Well, nothing until some become so dominant that they are the de facto supplier of a service and create barriers of entry to new players. The app market also has one very significant trait. We expect apps to be free and herein lies the danger. Free apps come at a price and the price is ticking that box that says we have read the terms and conditions and accept them. Who amongst us actually reads these terms? Have a go; they are often written in legalise, run to thirty pages, and contain links to all sorts of other policies such as the privacy notice. And what if we don’t like the terms? They’re non negotiable so tough luck if you don’t want every search entry indexed, if you don’t want to be profiled and have whatever you do on the app spied on and details about you sold to any old third party. This is the cost of free apps and a whole generation have grown up used to this model, even if few truly understand the implications of it.
We also see the emergence of the tech giants, who stray into political influence and policy, having little effective regulation. An example of this is the banning of users that expound views which apparently are against the policies of the tech giants, the most notable being ex US president Donald Trump. It may well be that you don’t agree with Trump’s publications (I use that word deliberately to represent a tweet) but equally do you agree with a random set of unelected, executives who are not answerable to anyone being able to muzzle him ? It seems that China has recognised this and is reigning in the power of the Chinese tech giants as we speak. Perhaps this is one case where the West should take a lead from China.
So, in thinking about what we want in the new era, a trusted, private, and safe environment seems first and foremost but in a market made up of so many players, how will that come about? Maybe the market will evolve or maybe regulators will intervene. We have doubts about both of these either happening or being effective. Perhaps a new type of application provider emerges. Ones with simpler, old fashioned business models that ask us for pay for the service we use rather than making their money from data mining and what they learn about us. Perhaps these players will be more open and honest about the data they want to compile about ourselves, and what they want to do with it. That almost seems like where were before the internet came along but we don’t for one moment suggest we abandon the new technology; we just suggest that the technology be a little more subservient to us the user rather than app developer.
Covid has shone a bright light on this whole area with internet access and remote working being suddenly thrust into the mainstream, speeding up a longer-term trend and probably knocking 10 years or more off the evolution of flexible working. This accelerates change, not only of the mobile networks who have become essential services providers for increasing numbers of customers but also the over-the-top services providers who are being pulled into the world of controls, responsibilities and regulation that have previously been noticeably absent from their business models.
If you would like to spend some time thinking through how we can help you find new revenues in the mobile internet era, why not give is a call.
* A note for those worrying about the phone in the hall. Old landline phones will still work after the network changes, and no one will need to change their phone number after the switch off. Get ready to plug your phone into your router though. If you have no internet connection (you won’t be alone) Ofcom has told us that you will to be able to buy a ‘simple connection’. We may all need to buy a new battery back-up though because whereas our old PSTN carried on working in a power cut out router at home will not.