The UK media and telecoms regulator, Ofcom, has today published an interesting new report for the Government that examines the future of TV distribution in an increasing broadband (internet) connected world and proposes how to address the inevitable tipping point – where Digital Terrestrial Television (DTT) services risk become too expensive to sustain.

As most people will already be aware from their own experiences, there has been somewhat of a radical shift in how we all access and view TV content over the past decade. Such content is now increasingly being viewed online, via services like Netflix, Amazon (Prime Video), NOW TV, Sky Glass, Virgin Media STREAM, YouTube and so forth.

The average person now spends 25% fewer minutes per day watching broadcast TV in 2023 than in 2018 and this trend is expected to continue. As a result, watching scheduled TV channels through DTT and Satellite is forecast to drop from 67% of total long-form TV viewing in 2022, to 35% by 2034 and 27% by 2040. Many of those who remain (rely solely on DTT) include people who are older, less affluent or have a disability.

As indicated above, this change in trends is typically going at a different pace for different groups of people.

TV Viewing by Different Groups

• Some (especially younger) audiences now only watch content over the internet, and little linear TV. Around 5.3 million households solely access TV over the internet.

• Most audiences (around 17.9m households) are ‘hybrid viewers’ and enjoy the best of both worlds: supplementing viewing of traditional TV channels with on-demand and scheduled content over broadband.

• There are then audiences who solely rely on DTT or Freesat for their TV viewing – around 3.9 million households today. These households are more likely to include people who are older, less affluent, or have a disability.

The difficulty is that this means broadcasters (e.g. BBC, ITV etc.) are now paying to distribute their content both online and via traditional infrastructures like DTT with costs rising. The less time people spend on DTT, the less cost-effective per viewer it is. “For the first time, many broadcasters have told us that they foresee a tipping point at which it is no longer economically viable to support DTT in its current form,” said Ofcom’s report.

Digging deeper into the report, it’s noted that a “significant number of broadcasters voiced concerns” in their evidence that maintaining the existing DTT infrastructure is “unlikely to be commercially attractive after the mid-2030s“. This is relevant as the UK Government have already committed to the future of DTT until 2034.

Broadband coverage plays a role in all this, particularly if online viewing ultimately becomes the only means of accessing TV. At present 99.8% of the UK can access download speeds of at least 10Mbps (i.e. leaving around 0.2% or c.60,000 premises without access), while “superfast” speeds of 30Mbps+ are available to 97% and gigabit (1000Mbps+) speeds can be taken by 78%.

Ofcom correctly notes that a speed of 10Mbps can be sufficient for both several Standard Definition (SD) and a single stream of High Definition (HD) viewing, although they don’t mention that this will inevitably improve as new video standards emerge and compression improves (as it always does, alongside faster computer processors).

However, in practice, multiple users in a household can quickly put this sort of connection under strain, and a speed of 30Mbps+ is thus expected by most stakeholders to become the future minimum – something the new broadband USO review will need to consider.

On the other hand, given the current strong pace of full fibre (FTTP) deployment and the Government’s own Project Gigabit programme (i.e. aiming to achieve c.99% coverage of gigabit broadband by 2030), the issue may end up being more about take-up than network coverage by the mid-2030s.

Ofcom’s Statement

Without intervention, there will likely remain a cohort of people who do not take up broadband because they do not have the means, skills, or interest to do so. To ensure any partial or full managed switchover is as inclusive as possible, Government, industry, and Ofcom would need to work together to design a scheme which provides significant consumer support.

Designing this scheme would be complex but there would be wider societal and economic benefits to increased digital literacy and connection to the internet.

The report then goes on to propose several different approaches for delivering universal TV in the future, which is based on there currently being “widespread support across the sector for TV services continuing to be available to all, with a strong offering from public service broadcasters“.

Potential Approaches for Maintaining Universal TV Access

1. Investment in a more efficient DTT service – a more efficient, but full DTT service could be an option if audience scale and investment could be sustained over the 2030s. This option may well include supporting audiences with new equipment for more efficient broadcast signals.

2. Reducing DTT to a core service – the DTT platform could retain a minimum number of core channels – for example the main public service and news channels. This would mean viewers mainly using the internet to access TV services, while also maintaining infrastructure that could deliver radio or TV, including if there are internet outages. It could be done as a temporary transition to a fuller switch off or remain indefinitely as a provider of last resort.

3. Move towards DTT switch-off in the longer term – a planned campaign to ensure people are confident and connected with internet services, so DTT could be switched off. It would take careful planning to ensure universality of public service media, with support for people so that no-one is left behind. This could have wider benefits for digital inclusion in other areas of society.

Ofcom doesn’t signal a preference for any particular approach because that’s more a matter for the Government, broadband providers and the broadcasters to decide. But the regulator does note that any transition would “take 8-10 years“, which makes it important that the work on this is starting now.

Report: Future of TV Distribution
https://www.ofcom.org.uk/../future-of-tv-distribution

News

Mobile operator Three UK has released its financial results for the first quarter of 2024, with revenue growth failing to drag EBITDA-CAPEX out of the red 

This week, Three UK have announced their quarterly results, taking the opportunity to once again promote their potential merger with rival Vodafone. 

The company saw revenue and margin increase by 9%, reaching £664 million and £424 million respectively. 

This was partly driven by more customers joining Three, with active customers increasing by 3% and active contract customers by 6%. 

However, despite more money coming in, the company still struggled to cover all its costs. Economic conditions remain challenging, with Three noting its rising costs and inflation as key factors in keeping its EBITDA less capex negative.  

The company left the quarter with capex losses of £130 million. 

Moving forward, the company has said that it will continue to work on growing its customer base, especially in areas like business services. 

“We have seen a solid start to the year, successfully growing our revenue and margin and adding 6% to our active contract base,” said CEO Robert Finnegan. 

“However, we continue to be impacted by inflationary pressures, and market conditions remain challenging. Our EBITDA-CAPEX remains negative, as it has been since 2020, which is unsustainable long-term.” 

In March, the company released its full year results for 2023, which saw EBITDA of £402 million, down 34% year on year (£612 million in 2022). Here the company also reported a Reported EBIT loss of £117 million, the first loss since 2010.  

Finnegan called this performance unsustainable, saying “the cost of rolling out and maintaining our 5G network, and our commitment to improving connectivity across the UK, has impacted our profitability.” 

Of course, the company used both press releases to plug its pending merger with Vodafone, with Finnegan adding “I believe that merging with Vodafone is vital to give us the required scale to invest, grow and compete to create a best-in-class network for the UK.” 

The deal is currently in the second phase of investigation by the Competition and Markets Authority (CMA), the results of which are expected in September. 

Keep up to date with the latest telecoms news by subscribing to the Total Telecom daily newsletter 

Also in the news:
Verizon Business and Cummins deal combines private 5G and neutral host tech
Samsung and Telefonica partner for German vRAN site
AT&T sheds cybersecurity division to create LevelBlue

News 

If the amendment is passed, ACP would undergo modifications

Amid confusion about the future of the Affordable Connectivity Program (ACP), several senators have proposed a new means of funding the program.

A bipartisan group of senators introduced an amendment to the Federal Aviation Administration (FAA) Reauthorization Act that would provide $6 billion in funding for the ACP. The amendment also allocates $3 billion  for the “rip-and-replace” program which funds the removal and disposal of wireless equipment from vendors deemed insecure by the federal government. Congress is aiming to pass the FAA bill before the agency’s operating authority expires on Friday, May 10.

The ACP has provided a $30/month broadband subsidy for over 23 million households (up to $75/month on tribal land) and is in its final month of funding. The maximum benefit in May is $14 per household (off tribal land) as funds dry up. The rip-and-replace program provides funding for operators to remove and replace equipment from untrusted providers including Huawei Technologies and ZTE Corporation. It is facing a funding shortfall of over $3 billion.

The amendment was proposed by senators Ben Ray Luján (D-NM), Jacky Rosen (D-NV), JD Vance (R-OH), Peter Welch (D-VT), Steve Daines (R-MT), and Roger Wicker (R-MS). Support for additional ACP funding has consistently been bipartisan.

By attaching  ACP and rip-and-replace funds to this must-pass bill, senators are hoping to overcome the delays that have prevented previous bills, and even calls from the White House, from succeeding in funding the programs. The amendment will require a vote in the Senate or approval from Senate leadership to be attached to the FAA legislation.

Notably, the funding proposed for the ACP in this amendment is lower than the $7 billion Congress proposed in the ACP Extension Act. In addition, there will be significant tweaks to the program.

If the amendment is passed, ACP income eligibility would reduce from 200% of federal poverty line to 135%, in line with eligibility for the FCC’s Lifeline Program. The amendment would also repeal the ACP’s one-time device subsidy, eliminate ACP eligibility through U.S. Department of Agriculture’s Community Eligibility Program, and require FCC to update ACP rules within 180 days of enactment.

In a note to investors, New Street Research Analyst and former FCC official Blair Levin wrote that “while there remains uncertainty about the fate of this amendment and the FAA reauthorization process, for the first time we think there is a material chance that an ACP extension happens.” In part, this is due to the fact that the Republican co-sponsors of the bill “carry significant weight in the Republican Senate caucus,” increasing the chance of Republican support for passage of the new bill.

Gigi Sohn, executive director of the American Association for Public Broadband (AAPB) encouraged the Senate “to move quickly to add this amendment” to prevent the 23 million households who use ACP from losing internet access. “By doing so, Congress would give themselves and the FCC time to start the process of reforming the Universal Service Fund (USF) so it can provide a permanent funding mechanism for low-income families to get and stay connected,” Sohn said in a statement.

Levin echoed this sentiment, noting that if the amendment passes, it will set up a “ticking clock” for Congress to adopt USF reforms that would “put the ACP (and the rest of the USF system) on a sustainable framework.”

Further public support for the amendment has come from Kathryn de Wit, director of Pew’s broadband access initiative, and Joe Kane, director of broadband and spectrum policy at ITIF.

“With millions of people lacking access to a service that has become essential for quality of life and economic well-being, the time to act is now,” de Wit told Fierce Network. Kane applauded the amendment as “the most united, bipartisan effort to extend ACP yet” while admitting disappointment at the proposed shrinkage of the program.

If the amendment passes, the $6 billion is likely to last a year. Furthermore, there is still debate over whether the ACP should be absorbed into the USF, and about how the USF should be reformed. It’s clear that, as Kane noted, “this is not the end of the ACP saga.”

How is public funding reshaping the US telecoms market? Join the discussion at Connected America 2025

Also in the news:

BT wins £70m IT contract with South West police forces
Microsoft announces $3.3bn Wisconsin AI investment
US govt allocates $285m for chip-focussed digital twins institute

News

The ten-year contract with Devon & Cornwall Police and Dorset Police will see the operator provide managed IT services, including support for body-worn cameras and vehicle radios

Today, BT has announced it has won a $70 million contract to upgrade and support the IT infrastructure of the Devon & Cornwall and Dorset police forces.

The deal covers numerous aspects of IT technology throughout the respective organisations, including field mobile, airwave vehicle, and handheld connectivity solutions, and security and customer service desk applications.

In addition to modernising the police force’s equipment, BT says the upgrade will also improve the organisations’ cybersecurity and help them cut costs through service delivery efficiencies.

“Efficient and resilient technology infrastructure is crucial to support the police in tackling both current and emerging threats – so we’re proud to have the back of South West police forces by delivering exactly that,” said Ashish Gupta, Managing Director, Corporate and Public Sector at BT. “This new managed service from BT will help future-proof connectivity in all areas of policing, from those on the frontline to behind-the-scenes support staff, helping them to protect the public and keep pace with the changing nature of crime.”

The two police forces comprise 5,100 police officers and 3,500 additional staff, which handle over 118,000 incidents each year.

How are the latest communication technologies transforming public services in the UK? Join the discussion at Connected Britain 2024, the UK’s largest digital economy event

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Virgin Media O2 reaches plastic waste milestone

News 

The move is Microsoft’s latest in a string of at investments aimed at expanding cloud computing and AI infrastructure 

This week, Microsoft has been joined by US President Joe Biden to announce plans to build a $3.3 billion data centre in Mount Pleasant, Wisconsin. The data centre will enable companies in Wisconsin and surrounding areas to develop, deploy, and use advanced cloud services and AI applications. 

Speaking at Gateway Technical College, Wisconsin, President Biden – who was joined by Microsoft President Brad Smith – announced that the investment will include cloud computing and AI infrastructure, the creation of the country’s first manufacturing-focused AI co-innovation lab, and an initiative to teach AI skills to 100,000 state residents. 

Microsoft will also work with Gateway Technical College to build a Data Center Academy that will train up around 1,000 students to work at the new data centre and related jobs within the next five years. 

The data centre investment, which will take place from now until 2026, is expected to create around 2,500 construction jobs by next year. 

“We will use the power of AI to help advance the next generation of manufacturing companies, skills and jobs in Wisconsin and across the country,” said Smith. 

“This is what a big company can do to build a strong foundation for every medium, small and start-up company and non-profit everywhere,” he continued. 

The facility is set to be built in the same location that Presidential rival Donald Trump once announced a similar investment. Back in 2017, Taiwanese multinational electronics manufacturing company Foxconn Technology announced plans to build a $10 billion 20-million-square-foot manufacturing facility in Mount Pleasant.  

The project was expected to create 13,000 jobs and the state legislature passed a $3 billion tax incentive package to support the project, which included $150 million in tax breaks for the company. 

Despite these large promises, however, the investment plans have diminished significantly. The original $10 billion investment has dwindled to $672.8 million, while the job creation target has decreased from 13,000 statewide to just 1,454, and the incentive package reduced to $80 million. 

“My predecessor made promises, which he broke,” said President Biden at the Microsoft announcement. “On my watch, we make promises and we keep promises.” 

Microsoft has been making continual investments in the AI and data centre space for some time in both domestic and international markets, aiming to keep ahead of rivals such as AWS and Google.  

Earlier last week, for example, Microsoft partnered with asset management company Brookfield to invest $10 billion in renewable energy to supply their data centre assets. The agreement is the first of its kind and is almost eight times larger than the largest single corporate power purchase agreement ever signed. 

Additionally, last month, the company unveiled an AI hub in London, following Microsoft’s 2023 pledge to invest £2.5 billion over the next three years to expand its UK data centre infrastructure.  

Keep up to date with the latest telecoms news by subscribing to the Total Telecom daily newsletter

Also in the news:
US govt allocates $285m for chip-focussed digital twins institute
US chip companies have licenses to sell to Huawei revoked
German U-Bahn completes high speed 4G deployment 

Telecoms and broadband giant BT has today signed a 10-year partnership, worth £70m, to upgrade the IT and network services of both the Devon & Cornwall Police and Dorset Police forces. The two forces currently handle more than 1 million emergency and non-emergency calls and respond to more than 118,000 incidents of recorded crime each year.

Under the deal, BT will support public contact and staff collaboration platforms, while frontline officers can also expect to benefit from “improved connectivity” for devices like mobile phones, body-word cameras and vehicle radio systems.

Security protocols will also be strengthened to help protect against external cyberthreats and officers will be better able to access critical real-time information. Not to mention helping to cut costs through greater efficiencies of service delivery.

Ashish Gupta, BT’s MD of Corporate and Public Sector, said:

“Efficient and resilient technology infrastructure is crucial to support the police in tackling both current and emerging threats – so we’re proud to have the back of South West police forces by delivering exactly that. This new managed service from BT will help future-proof connectivity in all areas of policing, from those on the frontline to behind-the-scenes support staff, helping them to protect the public and keep pace with the changing nature of crime.”

Perhaps this might also help the forces become more effective at actually catching shoplifters and home burglars too, but that’s probably wishful thinking on our part.

Network operator nexfibre has today announced that they’ve expanded their 2Gbps speed Fibre-to-the-Premises (FTTP / XGS-PON) broadband network, alongside partner UK ISP Virgin Media (VMO2), to cover an additional 11,000 premises in the Essex town of Braintree.

Nexfibre has already covered 1 million premises across the UK with their new full fibre network, and they’re currently in the process of investing another £1bn during 2024, which should enable them to cover an additional 1 million UK premises on top of that. Both Virgin Media and nexfibre share some of the same parentage in Telefónica and Liberty Global.

Just for some context. Telefónica, Liberty Global and InfraVia Capital Partners originally set up the new £4.5bn nexfibre joint venture in 2022 (here), which aims to deploy an open access fibre network to reach “up to” 7 million UK homes (starting with 5m by 2026) in areas NOT currently served by Virgin Media’s separate network of 16m+ premises. The funding reflects £3.3bn of fully underwritten financing and up to £1.4bn in equity commitments.

Taken together, nexfibre and Virgin Media O2 will cover up to 23 million premises, or around 80% of the UK, by the end of 2028.

News

The funding comes as part of the CHIPS and Science Act, aimed at supporting the nation’s domestic semiconductor industry

This week, the US government has announced that it is seeking proposals from companies to establish and operate a new CHIPS Manufacturing USA institute focused on digital twins for the semiconductor industry.

The government will provide the winning applicant with up to $285 million to help establish the centre, including supporting operational activities, R&D projects, and workforce training.

Digital twin technology – using precise virtual models of physical processes to test and refine them – is becoming increasingly prominent in numerous industries, from the telecoms sector to construction. In the context of semiconductors, the technology is expected to help improve manufacturing, advanced packaging, assembly, and various test processes.

The cloud-based nature of digital twins will also allow for greater opportunities in collaborative design, as well as the incorporation of new technologies like AI to further accelerate R&D. ­

“Digital twin technology can help to spark innovation in research, development, and manufacturing of semiconductors across the country – but only if we invest in America’s understanding and ability of this new technology,” said Secretary of Commerce Gina Raimondo. “This new Manufacturing USA institute will not only help to make America a leader in developing this new technology for the semiconductor industry, it will also help train the next generation of American workers and researchers to use digital twins for future advances in R&D and production of chips.”

The funding comes as part of the CHIPS and Science Act, which was introduced by the Biden Administration in 2022 and allocates $52.7 billion in public funding to the development of the US’s domestic semiconductor industry.

So far, much of this funding has been delivered as subsidies for companies seeking to set up chip manufacturing plans on US soil. These include not only US companies like Intel, which received $8.5 billion for commercial semiconductor projects earlier this year, but also the likes of Taiwan Semiconductor Manufacturing Company (TSMC), which received $6.6 billion to build a third semiconductor fab in Phoenix, Arizona.

How is public funding reshaping the US telecoms market? Join the discussion at Connected America 2025

Also in the news:
T-Mobile and EQT form JV to buy Lumos
Korean Air shows off comprehensive urban air mobility system backed by 5G
Virgin Media O2 reaches plastic waste milestone

The Cardiff Council (Gyngor Caerdydd) in South Wales has once again chosen UK broadband operator Telcom Group (WeFibre, HyperCity etc.) to supply residents and businesses in poorly served parts of the city with “hyperfast gigabit connectivity“, which forms Phase 2 of an earlier Phase 1 roll-out.

At present the vast majority of Cardiff and surrounding areas are already covered by gigabit-capable broadband networks, mostly via Hybrid Fibre Coax (Virgin Media) solutions and Fibre-to-the-Premises (FTTP) infrastructure from the likes of Openreach, Hyperoptic, Ogi, FibreNest (Persimmon Homes) and the community orientated Michaelston-y-Fedw CIC project.

However, there are still patches of the area that lack any commercial upgrade plans for gigabit broadband and suffer from sub-30Mbps broadband speeds, which is what the local authority has been trying to improve – using a £7.7m funding boost from the Welsh Government that was first awarded in 2022 (here), via the Local Broadband Fund (i.e. providing full fibre broadband to 1,219 homes and other sites).

Last year we reported that Telcom had won a contract to deliver the first phase of this network roll-out (here), which was originally due to complete in January 2024 (here) but actually ended up finishing a little later in March 2024. Phase 1 is understood to have delivered the new fibre connectivity to 79 sites, both residential and commercial.

The news today sees the Telcom Group confirm that they’ve also been contracted to deliver Phase 2 of this project, which isn’t too surprising as the council did all but confirm this back in November 2023. As before, the council’s approach is that premises identified as high on the Welsh Index of Multiple Deprivation (WIMD) should be the first to be addressed.

Chris Baldock, Executive Chairman at Telcom Group, said:

“We are delighted to have been chosen to deliver this network for Cardiff. Telcom has extensive experience delivering on the promise of fast and reliable full fibre internet infrastructure across the UK’s major cities. We believe that access to fast and reliable internet is a fundamental human right, and that bringing full fibre internet to Cardiff will both empower the city’s economy and enrich the lives of its residents.”

Cllr Chris Weaver, Cabinet Member at Cardiff Council, said:

“This project will deliver high quality fibre broadband to some of the most deprived communities in Cardiff and I am pleased that the second phase of the project is now underway and will be complete by March 2025.

Along with the significant improvements to broadband infrastructure that wouldn’t have been provided by commercial operators, Telecom is also offering a Social Value Tariff. It is vital that projects such as this offer social value to our communities, and in this case, significant benefits to these areas of the city, so that residents and businesses can access fast reliable full fibre broadband.”

Once again there’s a distinct lack of detail around what Phase 2 will actually deliver (we also checked the council’s website and found precious little info.), although it is noted that the second phase is “planned for delivery throughout 2024/2025” (i.e. completion by the end of 2025).

Along with the improvements to broadband infrastructure, Telcom is also offering a Social Value Tariff, as well as local employment and training facilities through their Telcom Engineering Bootcamp.

New data from telecoms analyst firm Point Topic has revealed that, at the end of Q1 2024, nearly 7 million UK premises had access to two or more full fibre (FTTP) broadband ISP networks, falling to just 0.8m for three or more networks. Some 64.7% of UK premises (20.7m) are now covered by such a network, while Altnets are still seeing good growth.

The latest progress report (here) notes that Openreach’s Fibre-to-the-Premises (FTTP) network now covers 40.3% of all UK premises, which is up from 37.4% three months earlier. But the most interesting figures tend to come from alternative networks (Altnets).

Among the FTTP altnets with at least 100,000 premises passed, the analyst recorded the highest quarterly growth at F&W Networks (+90%), Grain Connect (+59%) and nexfibre (+54%). In addition, an increasing number of altnets are exceeding the 100K fibre premises passed figure, thus the chart below is starting to expand. But Jurassic Fibre should now really be having its figures bundled with Swish Fibre and Giganet (all under the merged AllPoints Fibre brand).

Premises passed by altnets in Q1 2024
(more than 100K premises)

Among all the Local Authorities (LA), the largest number of FTTP premises added during the quarter was in Glasgow (+24.5K), followed by Birmingham (+24K), Buckinghamshire (+20K) and Pembrokeshire (+20K). For the first time, we have local authorities from the South East and Wales in this ranking (Ogi is partly to blame for the latter, as they added 23,000 premises during Q1 in Wales).

However, despite some operators slowing down their footprint expansion due to cost, labour and contractor issues, some 30 local authorities still saw 10%+ growth in the percentage of their premises passed with FTTP networks during the quarter (down only slightly from 31 last quarter).

At the other end of the scale, it’s worth having a look at the bottom ten LAs for FTTP premises passed in Q1. Point Topic signals a note of encouragement here because the latest table features higher percentages – 4.9% to 17.5%, as opposed to 1.5% to 16.4% in the previous quarter, as FTTP covers more premises in more local authorities.

Compared to Q4 2023, the Shetland Islands have slid down to the bottom of the ranking with only 4.9% of premises in the area having FTTP, having been overtaken by the Isles of Scilly (+4.7% FTTP premises in the area q-o-q) and Copeland (+7.1%). Meanwhile, Tamworth, having added c.2,000 FTTP premises in the quarter, got pushed out of the ‘list of shame’ by Telford and Wrekin.