The restructuring of digital markets has begun

The economic structures and business models of the on-line world are changing.

The day after I blogged on why shareholders would wish to break up BT we got news that the sell offs were under way, beginning with the head office and some of the overseas subsidiaries.  The share price stopped sliding. Then the  Vodafone share price jumped after the news it was to spin out its masts and use Cornerstone to share 5G infrastructure with O2. City Fibre is using its new found financial backing to connect fourteen more cities, part new build and party relighting “orphan” municipal fibre networks. The Wireless Internet Group recently acquired the in-building operations of Arqiva. Ofcom is following the rest of the world in opening up “shared access spectrum”. Virgin has announced plans to wind up its speeds and done a new content deal with Sky (now owned by Comcast).  The processes that enabled the “platform” dominance of the current incumbents (Amazon, Facebook, Google) are under scrutiny from both  anti-trust authorities and the advertisers who fund “free” social media and search engines. President Trump is also taking aim at the way their lobbyists and lawyers use Federal contracts to further increase their dominance of cloud services. Whatever his motives, he appears to be the first president since Taft to take anti-trust seriously.

The technology architectures and structures are also changing.

There has been much cover in the technical press BT’s  decision to adopt an Open Stack core , akin to that used by AT&T and Deutsche Telecom, to support and knit together the communications networks and technologies of the future. Meanwhile the US has forced Huawei to exit the main international submarine cable consortium at the same time as major US players are investing in their own cables to improve the resilience of their cloud centres.

Will this mean that the technology giants wish shift their lobbying efforts to the ITU, which set almost all global inter-operability standards until the Internet Protocols replaced X25? If so how will they acquire the votes of the developing world now leapfrogging their legacy IPR? How will the boundaries with the IETF and other telecoms standards bodies “evolve”? And will the UK include funding for participation, hosting and perhaps even “leadership” into its priorities for making the UK the best place to do on-line business.

Exploiting the Brexit Policy Opportunity

Readers will know that I have come to reluctantly believe that Brexit is the only way to create a new and more constructive relationship with the protectionist kleptocracy that has condemned the youth of Europe to mass unemployment unless they come to the UK. That means building on the best of what has been achieved while extricating ourselves from the worst and a friendly divorce with joint custody of those children we acknowledge as part of the divorce. And telecoms policy is one of those areas where the EU got it right, including the constraints on BDUK which would otherwise have given its money to BT with almost no controls or clawback.

The new UK Government is said to be entering into a series of root and branch review of the policies it inherits, including to deliver on the Prime Ministers aim to expedite the transition to full fibre broadband. We have a digital minister who has built and run regional business telecoms companies. Can we, therefore, hope to see a long overdue focus on the needs of British business instead of the preservation of BT’s leased line revenues to protect the Treasury guarantee of its pension fund? Will that will translate into new priorities for Ofcom?

What polices might the  new minister adopt to help ensure the UK benefits from leading the transition from the current jungle of fragile, semi-incompatible communications networks to a world of seamless, ubiquitous, resilient, secure, meshed, digital infrastructures? One of the last acts of the outgoing DCMS Secretary of State was to launch a review of the telecoms supply chain . Hopefully the new digital minister will ensure that this takes place in the context of the new world that is being created.

It is almost exactly five years since I blogged on the need to address the transition to an evolving “future proof” mesh in response to the Digital Infrastructure Consultation of 2014.

What the current questions for review?

At one level they are becoming easier.

  1.  Change is accelerating, making attempts to predict the future in order to regulate it ever more impractical – although that does not appear to stop some regulators from trying. The task is to remove the barriers to the changes we (voters) want to see and act more rapidly, efficiently and effectively against obvious abuses of dominant power and monopoly positions.
  2. Policies and regulations based on fictional boundaries between the fixed, wifi and mobile, terrestrial and satellite markets are losing relevance.  Most voters (alias customers), would like their service to roam over whatever is cheapest (to them) and working at the time. Some will pay (and some a lot more) for reliability and resilience. The issue is to ensure that those controlling  bottlenecks (whether access, transmission, switching or inter-operability) to do not indulge in anti-competitive behaviour to exploit or prolong their monopoly positions.
  3. The attempts of digital infrastructure provider (however defined) to become content providers (and vice-versa) are unravelling. The fashion for convergence (alias invading or taking over players in adjacent markets) is cyclical and nearly always ends in tears. The digital content market is now seriously over-crowded with players like Amazon, Disney, Google (YouTube et al) and the latter appear to be reigning back on infrastructure investment, other than to support their cloud infrastructures. The issue is to act rapidly and robustly against predatory cross-subsidy.

At another they are becoming harder.

We have many more (and better paid) lobbyists and regulators arguing (particularly in London, Brussels and Washington) how many digital angels there are on the head of a pin.

More-over the future is now being built in the Southern Hemisphere, under the aegis of the ITU, away from the attentions of US IPR and Telecoms lawyers.

President Trump’s trade war with China has come too late to prevent them from providing cost effective, holistic infrastructure solutions for most of the world, even if they are cut off from North American markets.

How will the EU respond – almost certainly with protectionist initiatives which claim to be forward thinking?

How will the UK respond, caught between the USA, China and the EU?

Will we revert to our internationalist roots, exploiting Brexit to the full?


Remember the comment by De Gaulle’s minister of culture, Andre Malraux on why the sun never set on the British Empire. “Even God does not trust the English in the dark.”

This is a time for imaginative policy. Of course we play by the “rules” … but as interpreted in our courts … by our judges. It is their international reputation that is our “secret weapon”. It underpins the position of London as a global trading centre. Reclaiming that “weapon” is arguably the greatest Brexit dividend.

It is also a time for a cool look at how the digital world is evolving and our place within it.


Data Center
Data Management