Distributed Denial of Service (DDoS) attacks have existed for nearly as long as the internet. For telcos, the threat is nothing new. Yes, hackers are becoming more sophisticated, but this is the only direction of travel for cyber threats. Perhaps more importantly, as the telecoms industry continues to evolve, the stakes are changing too.

A tempting target 

The first ever DDoS attack was against a telecoms company in 1996 via a SYN flood on an ISP. Fast forward to today, and while many things have changed in the DDoS space, if you look at the big picture, more things have stayed the same. SYN floods, attacks that send a torrent of connection requests, still occur. Of course, as technology and defences have changed and improved, attack types and vectors have adjusted. According to a recent report, HTTPS Floods are now one of the most common attacks, making up more than one in five DDoS attack vectors. But the broad strokes are the same: attackers look for whatever vector, protocol or method they can exploit to bring down their target. The rules of engagement haven’t changed.

So why should telcos care? While the game might be the same, the stakes are so much higher for operators or communications service providers (CSPs). This is because telecoms has changed significantly in the quarter-century since DDoS began, becoming nearly unrecognisable. In that time, telecoms companies have transitioned from fixed traffic carriers to cloud-powered technology enablers. Telecoms underpins practically all business and critical infrastructure, and internet or data connectivity has become its bread and butter, rather than traditional voice services. This makes it a more tempting target than ever. A recent report from Zayo showed the telecoms industry was hit with almost half of all its recorded DDoS attacks in the first half of 2023.

The Devil’s in the detail 

While at a high level, most companies are aware of the threat of DDoS, the Devil is in the detail for service providers. The number of tools attackers have in their arsenal is bigger than ever, and with telecoms networks, the target is huge, so they are spoilt for choice regarding surface area and attack entry points.

While the most popular attack types, such as NTP Amplification, Memcached Attacks and the HTTPS Flood mentioned above, can all be targeted at CSPs, some methods are unique to communication companies. One of these attack types is particularly damaging because it exploits the large scale that telecoms operate on rather than pinpointing a single server or Internet Protocol (IP).

“Carpet bombing” or “Bits and Pieces” attacks send mass junk traffic across a CSP network. Rather than overloading a single IP with a large traffic volume, it disperses smaller packets across a wide pool of IP addresses or prefixes. This stealthy attack targets multiple hosts and is designed to evade detection from devices like firewalls, load balancers or thresholds. The attack traffic blends in with the legitimate, making many small drops in the ocean rather than one noticeable splash.

When they go undetected, these attacks often heavily degrade the service, rather than taking it offline altogether. The large-scale convergence of polluted traffic towards a single IP prefix often exceeds the capacity limits of generic mitigation devices, leading to high latency or deadlock at worst.

The prevention paradox      

While mitigating against DDoS attacks has been on telcos’ priority lists for the past few years, the amount of things they have to consider as part of this has increased enormously. With more traffic coming through these networks thanks to 5G, AI and other advancements, threat detection is more important than ever, but attackers have so much more space to hide.

DDoS prevention has always been a balancing act. Financially, it’s about finding the line between over- and under-spending. But when it comes to prevention, a balance must be struck between blocking as much fake traffic as possible without creating too many false positives – legitimate traffic incorrectly identified as malicious and blocked. False positives can cause as many problems as attacks, so CSPs using a positive security model (similar to zero-trust) may effectively prevent attacks at the expense of their customers.

Of course, failure to adequately block this malicious traffic can hurt customers just as badly, if not worse. In today’s ultra-connected world where telecoms services underpin everything, downtime can be the death knell for CSPs. Reputation also matters here, if a network experiences a major outage, organisations may think twice about relying on it for mission-critical services. But it is not just downtime that loses customers, “Bits and Pieces” attacks can clog and congest the network when left undetected, damaging the Quality of Service to such a degree that CSPs can drop below the levels agreed with customers in their QoS agreements.

With the volume of traffic that telcos have to sift through, AI is rightly seen as a potentially game-changing tool for threat detection. While AI will undoubtedly be hugely significant in the DDoS space in the coming years, as with any new technology in cyber security, it will be employed by both sides of the struggle. In many ways, AI is better suited to aid attackers as you can present specific scenarios or environments for automating attacks or vulnerability detection. AI is the latest example of things changing yet staying the same in DDoS prevention. The tools are evolving, but the technology race and endless cat-and-mouse game remain the same.

The old adage about crisis and opportunity is true here, however. CSPs who get DDoS protection right can actively turn it into a business gain. This goes way beyond simply standing out from competitors with superior DDoS credentials. Just as telcos have capitalised on technology advancements such as the cloud, 5G and AI, those that embrace and add DDoS protection as part of their digital transformation journeys stand to benefit most as their customers come to see them as managed security service providers. By offering these defences directly to their end customers as part of a cloud-in-the-box DDoS solution – on top of securing the overall network – CSPs can diversify their business model, adding a new revenue stream and turning their DDoS problem into business gain.

Donny Chong, Director, Nexusguard, has over fifteen years of experience assisting ISPs worldwide to productise anti-DDoS services in their local markets. Donny played a key role in defining Nexusguard’s managed DDoS protection services for both the communication service providers (CSPs) and enterprise customers.

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The operator made the announcement on the second anniversary of its launch of 5G services in Portugal, a business it claims is going pretty well, incidentally. While it was keen to talk up the potential of 5G SA, citing the usual suspects like applications requiring ultra-low latency, network slicing, and so forth, it’s not wholly clear whether the new SA core is actually operational or simply ready to go.

Nonetheless, the announcement is worth noting because it demonstrates that the industry is actually making some progress in 5G SA, albeit perhaps more slowly than many expected.

Indeed, just last week Dell’Oro shared its latest figures on the global mobile core market which showed that the third quarter of the year recorded the sector’s slowest rate of growth for almost six years. Naturally, a difficult macroeconomic climate, the rising cost of capital, and the like took their toll on the market, but so did a lack of growth in the 5G SA space.

The analyst firm put the number of 5G SA network launches to seven in 2023 to date, down from 17 in 2022.

Nos potentially adds another one to that figure – if its 5G core is actually up and running – but the market is not exactly booming. Nonetheless, every little helps.

Nos worked with Nokia to install its 5G data core and signalling, while Ericsson was responsible for the voice element, it said. It carried out its first data session over the network on 7 September.

Now it is looking ahead to what 5G SA will enable. Like its peers elsewhere in the world, Nos is talking about the development of services that can benefit from the ultra-low latency afforded by 5G SA, the opportunities for guaranteed quality of service thanks to network slicing, private networks, and the ability to support new IoT applications. It highlighted mission-critical areas such as autonomous driving and remote control of machinery, as well as augmented and virtual reality applications and improved quality of experience with gaming.

The telco reminds us that 5G SA has been available at its development hub since May 2022, which presumably means it expects there to be new applications and services being made ready.

“With the new developments, we now enter a new phase, which aims to make this technology fully available,” the operator said, without providing further details.

It was happy to crow about its 5G prowess though, noting that it has spent €420 million to date on 5G networks and plans to add another €110 million in the coming years. It claims to have the best 5G coverage in Portugal with 4,200-plus base stations providing the technology to 93% of the population.

As it stands, one in four of its customers has a 5G device and the vast majority, or 84%, are regular 5G users. “These are numbers that are expected to grow very quickly,” the firm predicted, given that as it stands 76% of the smartphones it sells are 5G devices. It added that it has 5G IoT deals with more than 500 companies in areas such as healthcare and retail.

All in all, this announcement was mainly timed to mark two years of 5G for Nos and served as a chance for the telco to talk about that. But it is also clearly making plenty of headway with 5G SA, and that’s good not only for Nos itself, but also for the broader industry.

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A study by Ofcom has found that 79% of teenage Internet users aged 13-17 use gen AI tools and services, compared to 31% of adults. Of those adults who have never used AI, 24% have no idea what it is.

OpenAI’s ChatGPT has been hogging the headlines, so it’s no surprise to learn from Ofcom that it’s the most popular gen AI among the sample group.

Younger Internet users prefer to get their ChatGPT fix via Snapchat My AI. Ofcom says 51% of 7-17 year-olds use the ‘digital sidekick’, which is more or less just ChatGPT dressed up in Snapchat colours. ‘Oldies’ are more inclined to go directly to the source, with 23% of Internet users aged 16 and above professing their use of ChatGPT.

As for what all these people are using it for, the most popular answer is fun, which if nothing else is a damning indictment on what passes for fun in the 21st Century. Nonetheless, 58% of respondents enjoy just interacting with AI, compared to 33% who use it for work, and 25% who use it to help with studying.

“Getting rapidly up to speed with new technology comes as second nature to Gen Z, and generative AI is no exception,” said Yih-Choung Teh, group director of strategy and research at Ofcom. “While children and teens are driving its early adoption, we’re also seeing older Internet users exploring its capabilities, both for work and for leisure.

“We also recognise that some people are concerned about what AI means for the future,” he continued. “As online safety regulator, we’re already working to build an in-depth understanding of the opportunities and risks of new and emerging technologies, so that innovation can thrive, while the safety of users is protected.”

Indeed, 58% of those surveyed said they are concerned about the potential impact of AI on society. Younger AI users are more cognisant than most, with 67% of 16-24 year-olds saying they are concerned.

As has been extensively documented by Telecoms.com and elsewhere, discussions on AI safety have been numerous and progress is being made to channel the power of AI for good, and rein in its potential to spread prejudice and misinformation.

Just this week, the UK National Cyber Security Centre (NCSC) together with the US Department of Homeland Security’s (DHS) Cybersecurity and Infrastructure Security Agency (CISA) published guidelines designed to help companies build AI systems – either from scratch or running on top of existing AI tools – that function as intended, and work without revealing sensitive data to unauthorised parties.

They cover secure design, development, deployment, operation and maintenance. They have been developed with input from no fewer than 21 international agencies and ministries from around the world, including all members of the G7 and the Global South.

“We know that AI is developing at a phenomenal pace and there is a need for concerted international action, across governments and industry, to keep up,” said NCSC chief executive Lindy Cameron.

“These guidelines mark a significant step in shaping a truly global, common understanding of the cyber risks and mitigation strategies around AI to ensure that security is not a postscript to development but a core requirement throughout.”

Between global cooperation on AI guardrails and Gen Z being well aware of AI’s dark side, there’s hope for the world yet – maybe.

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It’s the product of a successful application to Canada’s Cyber Security Innovation Network program that has pledged to provide up to $80 million in funding to support cybersecurity initiatives across the country.

The intention is to drum up some automation and AI solutions that can detect, protect and prevent attacks on 5G and future 6G networks, and develop new means to detect zero-day attacks

The project will also explore how AI-based solutions can better predict upcoming attacks and detect ongoing attacks, and apply ‘5G orchestration capabilities’ to test and deploy new defence mechanisms at run time.

“Canada is a leader in cyber security and similarly, our researchers and experts at Ericsson have long been studying how to best innovate and secure telecommunications networks,” said Jeanette Irekvist, President, Ericsson Canada. “It’s our hope that this partnership with Concordia University, the University of Manitoba and the University of Waterloo will help support the field and the adoption of made-in-Canada solutions. As we celebrate 70 years in Canada, it’s partnerships like this that continue to drive our success here.”

The Honourable François-Philippe Champagne, Minister of Innovation, Science and Industry, added: “In an increasingly digital world, trust is key to Canadians achieving their full innovative and economic potential. With this investment, the Cyber Security Innovation Network is strengthening our cybersecurity ecosystem by fostering partnerships to bridge sectors. The National Cybersecurity Consortium, Ericsson and university partners are showcasing how collaboration between the private sector and academia will ensure the innovations of today can thrive in the economy of tomorrow.”

The project will serve as a springboard into ongoing research of 6G networks, claims Ericsson.

The release asserts that the adoption of new ‘business contexts and use cases’ at scale will place unprecedented new demands on networks, which will create complex security and privacy requirements, and foster a growth in ‘potentially unsecure’ devices.

In a similar vein, BT recently warned that the volume of cyberthreats in the UK is ‘rising at an alarming rate’, as businesses are pelted with 530 cyberattacks every second.

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This past year was another busy one for the internet. In this webinar, Doug Madory, Director of Internet Analysis at Kentik, will provide an annual recap of 2023 and reflect on a wide range of internet activities that took place over the past 12 months – and what impact these occurrences could have for the future.

Attendees can expect to hear about:

• state of Border Gateway Protocol (BGP) – both routing leaks and progress in Resource Public Key Infrastructure (RPKI)
• submarine cables – both cuts and a historic activation
• major outages – from Azure to Optus
• the impacts from conflict on internet connectivity
• and more!

Speakers:
Doug Madory,
Director of Internet Analysis
Doug Madory is the director of internet analysis for Kentik where he works on internet infrastructure analysis. The Washington Post dubbed him “The Man who can see the Internet” for his reputation in identifying significant developments in the global layout of the internet. Doug is regularly quoted by major news outlets about developments ranging from national blackouts to BGP hijacks to the activation of submarine cables. Prior to Kentik, he was the lead analyst for Oracle’s internet intelligence team (formerly Dyn Research and Renesys).

To register for the webinar, click here.

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Look at SK Telecom (SKT). This week it announced some new partnerships – and expanded one existing one – as part of its continuing effort to make its metaverse platform, Ifland, a more compelling place to spend time.

Having signed an MoU with Malaysia’s CelcomDigi in March as part of a plan to extend Ifland further across Southeast Asia, SKT has revealed that CelcomDigi will now also help to promote Ifland and develop content tailored to the Malaysian market.

Similarly, SKT has also struck publishing partnerships with Indonesian games publisher Agate and Cosmic Technologies – a Philippines-based IoT platform provider and consumer electronics maker – to create localised metaverse content.

SKT gets the benefit of populating Ifland with virtual stuff that will appeal to local users, while CelcomDigi, Agate and Cosmic will gain some metaverse exposure without having to pour too much resource into development.

In addition, SKT said it is working on adding Hindi, Indonesian, Malay and Spanish to the list of languages supported by Ifland. It will also develop a curation feature that recommends content based on user behaviour and region, and generally improve overall global service quality.

“By signing agreements with three leading IT companies in Southeast Asia, we will be able to carry out customised marketing in these countries,” said Yang Maeng-seog, VP and head of Metaverse CO at SKT. “We will continue to do our best to provide Ifland users with content and services that understand their culture and society by partnering with more local companies.”

Going forward, SKT said it plans to grant broader administrative rights to international Ifland partners, giving them the ability to tailor the experience and make it more appealing to users in their home markets. In the longer run, it is also on the lookout for Ifland partners in the US, India and Europe.

With all the hype about generative AI this year, there is an overwhelming sense that the world has moved on from metaverse. Indeed, for its part, SKT has been one of the more vocal operators when it comes to its gen AI strategy.

But the preceding two years were undeniably all about metaverse, and despite the public’s waning interest in roaming virtual worlds in favour of excitement/existential dread about the potential for AI, SKT has not given up, and has continued its work on Ifland in parallel with its AI efforts.

In October, Ifland introduced an economic system based on its own purchasable currency, ‘Stone’. It not only allows users to buy virtual items, it can also be paid to sponsor hosts of virtual events. Conceivably it means someone could pay an influencer to show up as their avatar to a virtual meetup.

To encourage users to part with their hard-earned Stone. Ifland also increased the number of purchasable items to 20,000 from 4,000, a move designed to enrich the experience as well as SKT.

At the same time, SKT also added support for NFTs, enabling virtual items to be bought and sold via their Web3 wallet, ‘T wallet’.

In its Q3 financial report, SKT noted that 50% of monthly active users of Ifland are based overseas. It said it plans to continue its work with international partners to promote its uptake, and its monetisation by way of the recently-introduced virtual currency.

As far as SKT is concerned then, rumours of metaverse’s death have been greatly exaggerated.

The passive infrastructure specialist’s CEO March Patuano said as much in an interview with Reuters recently. He told the newswire that the firm is considering a full disposal of its businesses in those markets, businesses it bulked up considerably via the €10 billion deal for CK Hutchison’s European towers it inked in late 2020.

Cellnex closed the Austria and Ireland portions of that deal in early 2021, adding 1,150 and 4,500 towers respectively to its existing footprints there. Nearly three years on and its focus has completely changed.

This time last year, when the UK part of the Hutch deal finally closed, Cellnex made it clear that henceforth it would target organic growth and was shooting for an investment grade rating from S&P. Deleveraging became the name of the game and, following a change of management earlier this year, the company is on a completely different path to the one it once followed.

The firm brokered a deal with investment firm Stonepeak in September to sell a 49% stake in its Swedish and Danish operations as part of that debt reduction plan. And earlier this month it agreed to sell its Edzcom private networks business to Boldyn Networks, essentially pulling out of a market it until recently viewed as a strong growth opportunity, again in the name of debt-management and in pursuit of that S&P rating.

It indicated at the time that it would continue to “evaluate the possibility of monetising other assets,” so Reuters’ chat with Patuano hardly comes as a surprise. Rather, it adds some colour to what we already knew about Cellnex’s strategy.

There were also a couple of other interesting snippets of information in that interview: firstly, Patuano’s comments on cash and secondly his views on the market as a whole and the role his company will play in it.

Cellnex will have a sizeable capex bill for the next couple of years, with capital spending absorbing all the cash the business generates, he said. Capex will be high in 2024 and 2025, but will fall dramatically after that, meaning that Cellnex will be generating a lot of cash by 2027, he predicted.

That same time period could see big changes in the European towers landscape. There are six major tower operators in Europe at present, but that number will fall in the next few years, Patuano believes.

And while his plans for asset sales in certain European markets might lead industry watchers to guess that Cellnex will be a seller rather than a buyer, that does not seem to be the case.

The chief exec indicated that he could be interested in a new bid for Deutsche Telekom’s GD Towers business; Cellnex was one of a number of companies lined up for the asset that eventually went to DigitalBridge and Brookfield last year.

Patuano told Reuters that such a move could be a “very appropriate use of resources,” once the time is right.

Looks like Cellnex’s U-turn on spending could be short lived.

“We looked for options and found the hardware we used for the Amazon Fire TV Cube provided all the resources customers needed to access their cloud-based virtual desktops,” said Melissa Stein, director of product for end user computing at AWS. “So, we built an entirely new software stack for that device, and since we didn’t have to design and build new hardware, we’re passing those savings along to customers.”

It certainly makes for a compelling story. It probably has nothing to do with Amazon’s decision 12 months ago to gut its Devices and Services division as part of a redundancy programme that axed 10,000 staff.

A cynic might suggest that AWS had to go with a pre-existing design because they didn’t have anyone left in house who could come up with a new one. But that’s far too cynical. This is surely another case of Amazon being clever and resourceful.

Regardless of AWS’ motivation for repurposing the Fire TV Cube, the fact is, the hyperscaler has brought to market a thin client priced at just $195 per device, which makes it considerably cheaper than a PC or laptop.

Called the WorkSpaces Thin Client, it is available from Amazon Business, its B2B marketplace. Once up and running, it can connect to all the necessary peripherals at the user’s end – dual monitors, mouse and keyboard, camera and headset – and all the cloud-based applications and services on the host’s end. What’s lacking on the device is storage, which should help when it comes to avoiding viruses and the like.

Stein said its low cost lends itself well to remote and hybrid working environments, and high turnover workplaces like call centres and payment processing.

“Applications are in the cloud, connectivity is there, and we want to be able to access our desktop from anywhere,” Stein said. “All at a time when customers are saying, ‘we really, really need to look at our overall cost equation.’

“IT leaders can easily manage their entire organisation’s device fleet centrally and typically have an employee up and running in a few minutes, compared to hours or days with traditional laptops and desktops,” she added.

The only problem is, the thin client market has been shrinking for the past three years. According to IDC in March, shipments fell 7.9% in 2022, and are expected to be flat this year before recovering in 2024.

This is probably another reason why Amazon is keen to keep the cost of its thin client as low as possible, on the off chance not enough companies buy them.

Thin clients are nothing new. Various OEMs, including household brands like Dell and HP, make thin clients designed to connect to Microsoft’s cloud-based productivity apps and Azure cloud services.

The other big hyperscaler, Google, takes a different approach. When it comes to enterprise hardware, rather than thin clients, it steers customers towards Chrome OS-powered laptops and tablets instead.

With WorkSpaces Thin Client, AWS is taking a similar kind of vertical integration approach that Apple does with its products and Microsoft does with Surface, launching a device that promises to offer the purest possible experience of AWS.

“We have an entire division in our company that makes devices already,” Stein said. “Combining the expertise from the Amazon Devices group with logistics from Amazon Business and the power of the AWS Cloud is a strong combination for customers.”

It’ll be interesting to see if this combination is successful in the struggling thin client market.

Rumour and speculation in the Italian telecoms market has become the norm in recent years, thanks to TIM’s ongoing endeavours to reshape its business, another planned network sale from Wind Tre, and endless talk of Vodafone’s tricky position in the sector. While the composition of NetCo – more on that below – provides greater certainty to the TIM situation, Vodafone Italia is once again making headlines on the back of uncertainty.

Fixed and broadband operator Fastweb is one of a number of companies to have been exploring a possible tie-up with Vodafone Italia, Bloomberg reported, citing the usual unnamed sources with knowledge of the situation. The newswire implied that Swisscom-owned Fastweb is looking to acquire Vodafone’s local unit, but then went on to talk more generally about a “potential combination,” suggesting that some sort of merger could also be an option.

Looking at the shape of the market, any kind of M&A deal between Fastweb and Vodafone would make a lot of sense.

Regulator AGCOM’s latest figures, show that TIM is by far the leader in Italy’s residential fixed broadband market with a share of almost 39%, but that there is little to pick between second, third and fourth placed players Vodafone, Wind Tre and Fastweb, in that order. A merged – in whatever form that might take – Vodafone/Fastweb would boost its market share to over 30%, based on end-June data.

It’s not a given, but the companies would have a good chance of getting the authorities on side, given the number of alternative smaller players in the fixed market. Meanwhile, with Fastweb having little presence in the mobile space, where Vodafone is the country’s third operator behind Wind Tre and TIM, there would be no major regulatory hurdle there.

There would be complaints though, mainly from other players also interested in a merger with Vodafone.

Bloomberg notes that there are others, but names only Iliad, which famously had an offer for Vodafone Italia rebuked almost two years ago. The newswire claims Vodafone and Iliad have held “on-and-off discussions in recent months” with regard to the merger of their Italian businesses, but naturally we don’t know any more than that.

Iliad is a minor, although ambitious, player in Italy’s fixed broadband market, having launched its fibre-to-the-home (FTTH) offer at the start of last year and is a growing but distant fourth player in the mobile market, racking up a 12.8% share by mid-year. On paper, it makes a great partner for Vodafone, but any deal would mean the loss of a facilities-based mobile competitor, which makes for a tough regulatory sell. We’re still waiting for the EU to make a call on the Orange/MasMovil deal in Spain, which should clarify Brussels’ position on that front.

Further, Iliad and Vodafone would have to broker a deal that both companies were happy with, and that might well be an even tougher ask than obtaining regulatory clearance.

That being the case, Fastweb seems a credible choice of partner for Vodafone in Italy, again, subject to the companies’ abilities to agree terms.

The usual caveats apply – that no deal may materialise – but Vodafone clearly needs to do something in Italy.

It has been a difficult few years for all of the market’s major operators, not least TIM, which has been trying to flog its network assets for what seems like an eternity.

On Friday the telco formally presented NetCo, the business unit it first shaped back in mid-2022. The business unit includes the operator’s fixed network infrastructure and related real estate, the wholesale business, and its stake in Telenergia. NetCo will have more than 20,000 staff, the majority of which already work in the Wholesale and Network businesses of TIM, plus around 900 from its Staff functions.

That leaves around 16,300 full-time equivalent staff in TIM’s remaining service business, which equates to 17,500 people.

The new structure being in place will help pave the way for the sale of NetCo to KKR, a deal that – despite considerable opposition – TIM still expects to close next summer.

That clarity around what NetCo and ServCo will look like is a step forward for TIM, but there is still a long way to go in the networks sale, and in the reshaping of the Italian telecoms landscape in general.

Unnamed sources cited by El Confidencial said the Spanish incumbent hired Banco Santander, which calculated that Tech could be worth between €3.1 billion and €3.5 billion.

Two other banks allegedly tapped up by Telefónica – La Caixa and BBVA – were a little more conservative, valuing it at €2.7 billion. According to the sources, their reasoning is that Telefónica is looking to retain majority control of Tech, meaning potential investors are less willing to pay a premium to be a minority holder.

Even that lower valuation is still more than the €2 billion that was floating around when similar rumours emerged back in October.

Incidentally, one bank is conspicuously absent from the list. Morgan Stanley was hired by Telefónica back in January – according to reports at the time – to help it pitch Tech to potential investors.

However, according to the El Confidencial report, Telefónica’s relationship with Morgan Stanley allegedly soured when it emerged that the bank was serving as an adviser to Saudi Telecom Company (STC) as it built up a 9.9 percent stake in Telefónica.

Any investors looking to capitalise on demand for cybersecurity, IoT and big data solutions could arguably do worse than taking a stake in Telefónica Tech.

The fast-growing division turned over €1.33 billion in the first nine months of the year, up 30% on 2022. Telefónica said 85% of its revenue is generated in markets with strong currencies. Bookings were up 26% year-on-year.

When Telefónica presented its updated strategic plan – GPS – earlier this month, it said Tech will continue to play an important role in achieving its objective of generating €5 billion of free cash flow by the end of 2026. It has set a target for Telefónica Tech to generate €3 billion of revenue by then, which equates to a compound annual growth rate (CAGR) of 18%.

With a role in the group’s strategic plan, a strong order book, impressive revenue growth, and a portfolio of solutions that address some of the most in-demand areas of the enterprise tech sector, it begs the question, why would Telefónica wish to reduce the size of its holding?

Paying down net debt would be one reason. At the end of Q3 it stood at a hefty €26.5 billion; however that’s a €2.1 billion improvement on last year, so Telefónica appears to be handling it.

Another reason would be Tech doesn’t generate any income, but it seems to be doing OK.

Telefónica doesn’t share Tech’s earnings, but according to El Confidencial’s sources, the banks estimate that Tech will turn over €1.8 billion this year, with an EBITDA of €270 million.

In actuality then, the reason Telefónica might be inclined to sell is simply because its main lines of business – selling network access and related comms and data services – don’t derive enough benefit from Tech’s activities.

As such, the logical thing to do might be to cash in, pat itself on the back for a job well done, and spend that money on its core operations.

Max it will be available to anyone regardless of their operator, and will debut in Cameroon, Senegal, Mali, Burkina Faso, and Botswana before being extended to 12 other countries in the region in the coming months.

It is designed to allow users to manage mobile and fixed line accounts, is tied with Orange Money’s financial services, and has an e-commerce platform which offers digital content and a digital ticketing service allowing customers to buy tickets for gigs and the like. As well as Orange services, digital services from local and international partnerships will also be included.

Orange expects to have around 45 million active Max it users by 2025, and claims it has particular potential ‘in a part of the world where the smartphone is the gateway to everyday digital life.’

“Max it perfectly reflects the Orange’s spirit of innovation in Africa and the Middle East,” said Christel Heydemann, CEO of Orange. “By bringing together all our services and those of numerous partners, this application strengthens our position as a multi-service operator and our desire to offer the best of digital services to all our customers.”

Jérôme Hénique, CEO of Orange Middle East and Africa added: “With Max it, the Orange Middle East and Africa teams have done a remarkable job of co-creating with all stakeholders (employees, customers, partners, distributors, etc.), to provide them with a one-stop-shop that is simple, effective, customizable and inclusive. Now, with Max it, everyone can meet their different needs, such as managing their phone plan, finances or shopping. It’s an open, scalable platform that opens up many development opportunities for the continent and strengthens our approach to inclusion.”

It sounds like a similar push to BT’s recent consumer app launch EE ID, positioned as something like a hub around which customers organise their online lives. It also is not constrained to serving an existing customer base, and seems to be looking to attract customers from other network to sign up as well.

In an era where operators are vocal about struggling to make big returns on selling pure connectivity, we can probably expect to see more examples of this diversification in the future.

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Buoyed by the success of its existing shared access framework, the UK regulator is seeking to introduce greater flexibility into the management of shared spectrum, thereby making more spectrum available, particularly in the “busiest” 3.8 GHz-4.2 GHz band, it says.

We’ve heard a lot over the years about spectrum being a finite resource, the lifeblood of the mobile industry, and so on, so it’s not surprising that Ofcom – and its peers elsewhere in the world – are anxious to develop different methods of sharing.

Ofcom reminds us that it introduced its shared access framework in 2019 and interest has been strong.

“We’ve issued more than 1,500 licences for this form of spectrum access and we expect that demand will continue to grow as a number of other countries adopt similar approaches,” Ofcom said.

New uses included rolling out 5G cameras to broadcast large events, monitoring and automation of logistics and industrial sites, and 5G-based fixed wireless access. The 3.8 GHz-4.2 GHz band proved most popular, with more than 500 of those 1,500-plus live licences being in that frequency range; the regulator has awarded a total of 2,059 shared access licences in the past four years, but some have been surrendered or revoked.

The rules were set at a time when there was limited experience across the industry of how new users sharing frequency bands would interact, when levels of demand were uncertain, and real-world information on coexistence between services was limited, Ofcom said. Hence the reason for an update now.

The proposed changes for the most part revolve around loosening restrictions on shared spectrum. For example, a key tenet of Ofcom’s proposal is shrinking separation distances between users of the frequencies by around 75% for low-power usage and 90% for medium power, with a view to working on further improvements in future. Basically, it’s about squeezing more users into the available spectrum.

It also proposes allowing an additional three decibels of equivalent isotropically radiated power (EIRP) – a measure of power related to antennas – on its low power product to support wider coverage and reduce deployment challenges, especially in urban environments.

There are also proposals on removing requirements for users to maintain certain records for mobile terminals connected to low-power indoor base stations in the 3.8 GHz-4.2 GHz band, a move that would enable more neutral host solutions; and enabling neighbouring users across all shared access bands to collaborate on applications for new spectrum deployments and to work out bespoke licensing arrangements between them. It wants to cut some red tape, essentially.

There are also some pricing moves listed in Ofcom’s consultation document. It is looking at more incentive-based pricing to enable more efficient use of the spectrum.

That’s usually good news for most, but there will doubtless be some concerns from within the industry on safety, effective coexistence and so forth. Stakeholders will have the opportunity to have their say by responding to the consultation, which will remain open until 2 February.

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Highlights from its annual European Mobile Economy (PDF) report include the sector’s €910 billion contribution to Europe’s economy in 2022, and its employment of 2.2 million people – both directly and indirectly.

Mobile-based productivity generated €670 billion of value to the economy, while operators’ own contribution generated €110 billion. Operators also paid €110 billion of taxes last year.

By 2030, it is expected that European mobile operators’ economic contribution will reach €1 trillion, driven by the continued expansion of the ecosystem and take-up of advanced mobile services by more and more verticals.

In terms of coverage and usage, 460 million Europeans are now covered by mobile networks, reducing the coverage gap to just 14%. There are 900 million active phone connections in Europe, and penetration of smartphones and feature phones is expected to reach 91 percent by the end of the decade.

As for 5G, networks are on course to reach 87% of all mobile users by 2030, and the technology itself is expected to generate €153 billion of economic benefits.

However, the GSMA wants policymakers to disregard these achievements and undertake a regulatory experiment that could have some unintended and unwelcome consequences for end users.

“Europe has a strong history of leadership in mobile and digital technologies, but strong, sustained investment in networks is now needed to regain that leadership in the face of global competition,” said Daniel Pataki, VP for policy and regulation, and head of Europe for the GSMA.

To underscore its point, the GSMA noted that only 5% of commercial 5G networks in Europe have been upgraded to standalone (SA), compared to 25% in Asia-Pacific.

The GSMA claims Europe requires a reset of its policy framework governing digital communications, reforming what it calls outdated – and still largely national – regulatory approaches that have failed to deliver on the vision for a single telecoms market.

Recent developments, including the European Commission’s consultation on whether so-called large traffic generators (LTGs) should contribute to the cost of infrastructure investment – the fair share debate – and European Commissioner Thierry Breton’s call to facilitate consolidation that will create pan-European super-telcos, are welcome developments, he said.

The GSMA expects mobile network traffic to triple over the next five years, and therefore “our report shows that action is needed now to give European citizens and businesses the digital infrastructure they need for the future.”

However, there is plenty of evidence to suggest that the remedies that the GSMA is proposing will actually lead to worse outcomes for users.

Take consolidation, for instance. A report in June by the Balanced Economy Project, co-authored by professor Tommaso Valletti, head of economics at Imperial College Business School, concluded that in-market consolidation leads to higher prices and no increase in investment, despite telcos’ claims to the contrary.

The report, which was published following the agreement of the Vodafone UK/Three merger, claims that the average mobile customer will pay between £50 and £180 more per year if the deal goes ahead.

The US is often held up as an example of a mobile market where just three big operators, plus a smaller one in Dish, serve a market of 300 million people, whereas in Europe, four operators per market tend to fight over tens of millions of customers.

However, Valletti’s research highlights that investment levels in the US are lower than Europe, because there is less competitive pressure in the former. The reality is, the money that merging operators claim they will spend on infrastructure ultimately finds its way into shareholders’ bank accounts instead.

The US isn’t exactly flying the flag for 5G standalone either. Of its three giant mega-telcos, only one, T-Mobile, has made meaningful progress. Meanwhile, in October, AT&T said it was holding off activating its standalone core until the device ecosystem matures, while Verizon in November revealed that it is not quite confident enough in the technology to put its 5G SA core to commercial use.

And when it comes to making big tech contribute to infrastructure investment, there’s every chance that big tech will argue that without them, there wouldn’t be demand for mobile network access in the first place, and that perhaps it should work both ways, with telcos chipping in on data centre and content delivery network investment.

Take Meta, for example. It claimed earlier this year to have invested $100 billion since 2017 in global digital infrastructure. As the founder of the Telecom Infra Project (TIP) it has also helped to coordinate and shape the industry-wide development of new technology like Open RAN.

Taking all this into consideration, the European mobile industry needs to come up with a stronger argument for why anything should change.

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In his Autumn Statement delivered this week, UK Chancellor of the Exchequer Jeremy Hunt revealed that the so-called full expensing policy, introduced on a temporary basis in March, will become a permanent fixture. It’s a tax break for businesses that incur hefty plant and machinery costs, which in telecoms terms means network equipment basically.

Full expensing means operators can deduct the cost of network gear from their pretax profits and thereby avoid paying tax on it. That’s good news for the industry’s big guns, BT in particular, although largely irrelevant to smaller players yet to turn a profit, for now at least.

BT has been a strong proponent of the move. Just last week outgoing CEO Philip Jansen, who’s due to make way for his replacement Allison Kirkby in the new year, penned a missive extolling the virtues of full expensing tax incentives and doubtless made his position clear to the chancellor while he was at it.

His comments are worth looking back at, as they help to paint a picture of the climate for network investment in the UK…and many of his points are valid for other markets too.

“The BT Board, in deciding to make enormous long-term commitments on full fibre worth some £15 billion, had to do so in the knowledge that the investment would all be made up front with the returns some way off,” Jansen said. “The nature of our business is that most of our investments take at least five years to generate a return; but in the case of fibre that period will stretch to at least a decade.”

The board had the confidence to make that call in no small part thanks to previous decisions on tax, he explained.

A tax super deduction for infrastructure investors that came into force in April 2021 enabled BT to accelerate its fibre rollout target to 25 million homes by the end of 2026, up from 20 million. The full expensing policy, which replaced the super deduction, meant BT could add £300 million per year to its capital spending allocation, something it implies it needed in order to hit that new target and to speed up customer additions, also a capital-intensive process.

Those figures clearly helped build a convincing argument for policy makers. But now Jansen has got his way on full expensing, the UK incumbent has moved on to another key element of the Autumn Statement: quantum computing.

BT cheered the government’s stance on quantum technologies, describing its five quantum missions as “a critical step forward in the UK’s ability to lead” in this area.

“We’re delighted to see that one of the mission headlines is for the UK to deploy the world’s most advanced quantum network at scale by 2035, pioneering the future quantum internet. Nationwide quantum secure connectivity coupled with early commercialisation and an ambition for international quantum networks will be critical enablers of the UK quantum economy,” the telco wrote in a blog post.

Also by 2035, the government has pledged that there will be accessible, UK-based quantum computers capable of running 1 trillion operations and supporting applications that provide benefits well in excess of classical supercomputers across key sectors of the economy.

That comes in addition to three missions scheduled for completion by 2030. One will see quantum sensing-enabled solutions launched in every NHS Trust. Another outlines the installation of quantum navigation systems on aircraft, and a third looks at the deployment of mobile, networked quantum sensors to enable situational awareness capabilities in critical infrastructure in transport, telecoms, energy and defence.

The five missions form part of the government’s £2.5 billion Quantum Strategy. That’s a 10-year plan, running from 2024 to 2034, and includes at least £1 billion in investment from the private sector, incidentally.

In the shorter term, the state is spending £500 million on AI over two years. It aims to provide UK scientists and AI researchers with access to the computing power they need to process complicated tasks. Naturally, it talked up the non-controversial aspects of AI; the added investment “will help researchers make the extraordinary discoveries, such as better understanding climate change, discovering new drugs, and maximising the use of AI to improve lives,” it said.

The government is also working on facilitating the manufacture of semiconductors in the UK, including exploring opportunities for UK Infrastructure Bank funding and potentially giving chip makers a break on energy prices.

And it detailed a litany of other science, innovation and technology initiatives in areas including R&D, manufacturing, upskilling, LEO satellite development, and regulation. There are more details in this Department for Science, Innovation and Technology round-up.

As above, though, the most critical element of the statement for the telecoms industry at present is that full expensing policy. It removes a major potential hurdle to investment. Or indeed an excuse not to.

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Incumbent Telstra emerged as the biggest winner, picking up frequencies in both bands and committing to a total spend of A$545.6 million.

The operator was quick to share its joy, detailing its plans to use the spectrum to boost its 5G offering throughout Australia, highlighting in particular the 80 MHz of frequencies it acquired in the major metropolitan areas of Sydney and Melbourne.

In addition, “it’s particularly pleasing that we’ve also secured a significant amount of spectrum covering large parts of regional Australia,” said Telstra CEO Vicki Brady. “This will mean that even more customers in more places will enjoy our world-leading 5G network.”

In all, Tesltra secured between 55 MHz and 110 MHz of new spectrum in most markets in Australia, or as it said itself, “a large proportion of the available spectrum;” that translates to 326 lots out of 588 available, of which 574 were actually allocated.

However, rival operators TPG Telecom and Optus also bought frequencies, as did state-owned broadband network operator NBN Co.

NBN Co picked up 200 lots of spectrum but racked up the smallest bill at just A$14.4 million. It has yet to comment on the award, but presumably has acquired frequencies that will support its ongoing fixed wireless access (FWA) push.

TPG, bidding via its Mobile JV unit, agreed to pay A$128.2 million for 44 spectrum lots in the 3.7 GHz band, covering metropolitan and regional areas.

“Once deployed, this spectrum will deliver a huge capacity boost for our 5G mobile and fixed wireless services, providing greater speeds and better performance for new and existing consumer and business customers,” noted TPG Telecom’s CEO Iñaki Berroeta.

Meanwhile, Optus, which hasn’t had a lot to say on the matter, grabbed four lots of spectrum for A$33.5 million.

“The outcomes of the allocation process align strongly with our objectives,” said Nerida O’Loughlin, chair of the Australian Communications and Media Authority (ACMA), which carried out the auction.

Clearly those objectives included making the most money possible for the state. O’Loughlin didn’t put it quite like that though, of course: “The revenue raised reflects the market value placed on this spectrum as a valuable public asset,” she said.

That statement seems to run counter to Telstra’s comment that it gained its new spectrum “at a highly competitive price.”

But if both sides are happy, who are we to nitpick?

In the main, the ACMA talked up the usual benefits of the award of new frequencies for mobile.

“The allocation of this spectrum will support digital connectivity, promote competition and facilitate investment in new services for Australian consumers and businesses across metropolitan and regional areas of Australia,” O’Loughlin said.

The regulator and the telcos find themselves on the same side, then, in their public comments about the new airwaves, at least.

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This is according to research firm Canalys, which said the impact of spending cuts in the enterprise IT market is starting to ease, while growing interest in AI is beginning to offset the slowdown in other areas.

Growth was consistent with Q2, when spending also grew 16% year-on-year, topping out at $72.4 billion. This suggests the cloud market is entering a stable phase, said Canalys.

The big three hyperscalers – Amazon Web Services (AWS), Microsoft Azure and Google Cloud – accounted for 65% of total spending, and grew by 20%, slightly outpacing the rest of the market.

AWS is still the biggest single provider, with a market share of 31 percent, followed by Microsoft with 25%. Google claims 10% putting it some distance behind the top two. Its growth rate also slowed considerably to 10% from 31% in Q2. Conversely, Microsoft accelerated to 25% from 19%.

All three, noted Canalys have been busy ramping up their generative AI activities. Microsoft in particular caused a stir with the official launch of its AI assistant, Copilot, while all three of them have also launched AI partner programmes.

Given gen AI’s voracious appetite for computing resources, it stands to reason that hyperscale cloud providers are in a strong position to capitalise on demand.

“Generative AI unlocks a wealth of opportunities for channel partners to venture into new areas of business growth,” said Alex Smith, VP at Canalys. “The big cloud players and their partners can seize this exponential growth opportunity by identifying customers with an appetite for AI solutions, while simultaneously strengthening their AI capabilities and offering comprehensive portfolios of AI-related products and services to address these evolving needs.”

Despite the healthy growth, the overall cloud infrastructure services market – which for Canalys encompasses infrastructure-as-a-service (IaaS) and platform-as-a-service (IaaS) – is on course to fall short of Canalys’ full-year expectations.

Back in February, Canalys predicted that cloud spending in 2023 would grow 23% on last year, when it reached $247.1 billion. That makes for a projected total of around $304 billion.

However, since then, macroeconomic conditions have taken their toll on spending, tempering expectations for this year.

The running total so far for 2023 is $212.3 billion, which means there is $91.7 billion worth of ground to make up in Q4 if spending is going to meet that target.

Achieving this looks like a tall order, because it would mean the year-on-year growth rate in Q4 would need to be 39.7%. Given the market grew by 19% in Q1, and 16% in both Q2 and Q3, a sudden surge in spending is unlikely.

So, while AI hype is providing cause for optimism, it looks like the cloud infrastructure market won’t quite live up to its billing this year.

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The demo took place in September in the Spanish city of Ciudad Real, running on Ericsson’s RedCap RAN software, Qualcomm’s Snapdragon X35 platform, and Vodafone Spain’s live testing 5G network ‘CREATE’ (Ciudad Real España Advanced Testing Environment).

RedCap is supposed to allow devices like smartwatches or smart water meters to connect to 5G networks and transmit data at low power and lower cost.

The release states that the Snapdragon X35 platform is world’s first NR-Light modem RF, and this technology appears to underpin the demo. New Radio Light (NR-Light), we’re told, works with less complex gadgets than traditional mobile broadband devices (phones) and can also ‘complement the network APIs developed by Vodafone for its customers to extend the battery life of their devices.’

“This successful demonstration is an exciting moment for OEMs, network operators and network users, because it highlights a clear path to new devices and commercial use cases,” said Dino Flore, Vice President, Technology, Qualcomm Europe.

“The use of commercial 5G networks for lower-bandwidth applications is an important milestone, not least because this offers a migratory path for low-power devices with a 5G architecture, which also draws on the current and future benefits offered by 5G standalone (5G SA). We will continue to work with our customers, industry experts and our collaboration partners to accelerate the creation of 5G devices which present exciting new use cases for enterprises and consumers.”

Francisco Martín, Head of Open RAN, Vodafone added: “Vodafone is able to continually evolve and improve its network for customers by being first to test the latest technologies. We are delighted that our unique multi-vendor 5G network, CREATE, was able to host and validate such an innovative trial in collaboration with Qualcomm Technologies and Ericsson. The results show that networks will be able to support many more energy efficient connected devices in the future.”

The demo is part of a ramp up for the introduction of Snapdragon-based commercial devices which are expected in 2024.

Earlier this year, Juniper research put out some research which said the number of 5G IoT roaming connections will reach 142 million by 2027, up from just 15 million this year. IoT will account for 27% of all 5G roaming connections by that same date, four years hence, the analyst firm noted.

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