Dave Millett examines the UK’s poor telecoms record and its impact on business and global trade
It became apparent in 2016 just how far the UK is lagging behind the world in its telecoms infrastructure. Report after report highlighted the deficiencies and their increasing impact.
So what does this mean for our telecoms in the UK, heading into 2017?
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The UK is ranked 54th in the world for 4G coverage – that’s bottom in Europe for availability of fibre broadband to the premise – and half of businesses have no access to cheap fibre broadband. The country with the fifth largest economy in the world actually has one of the worst technology infrastructures amongst developed countries. The situation is so bad some have resorted to building their own broadband including a farmer in Lancashire B4RN.1
Brexit negotiations are due to start in earnest in 2017 and the aim, it’s claimed, is to ensure the UK will become a global trading nation again, attracting businesses from over the world to invest and locate here. However, our backwards infrastructure could become a major barrier.
A number of technology trends are increasing the significance of our poor infrastructure and will place even greater demands on it. In the UK, mobile data traffic2 soared by 64 per cent in 2016 while residential and small business fixed broadband traffic3 grew by 40 per cent.
So, will 2017 see the UK start to address the gaps or will we get left even further behind?
Firstly, at a consumer level even though iPhone sales were down by 12 per cent on value in the third quarter of 2016 almost 75 per cent of the UK population now own a smartphone. Average data usage is expected to grow five-fold by 2020. This is due, in part, to new uses for devices such as augmented reality (AR); the summer of 2016 saw a large percentage of the population obsessed with collecting Pokemon characters. In 2017 business applications using AR will start to appear. These could be floorplans appearing as you stand outside houses for sale or insurance quotes which are accessed by viewing your car through your phone.
Secondly, in 2017 we will increasingly hear about the Internet of Things (IoT) which will do far more than controlling our heating from our phone. Research firm Gartner predicts that the number of connected devices in 2020 will be twice the number of mobile devices, at 25 billion connections. All of these devices will use bandwidth and barely 65 per cent of the land mass of the country has access to 4G and many parts of the country, especially in rural areas, struggle to get 2G.
Thirdly, from a business perspective Cloud computing will continue to grow. Research from the Cloud Industry Forum (CIF) shows the overall Cloud adoption rate in the UK now stands at 84 per cent, with almost four in five (78 per cent) of Cloud users having adopted two or more Cloud services. This, in part, reflects the fact that many more software applications are available in a Cloud format, from basic Microsoft applications and simple storage such as Dropbox through CRM solutions such as Salesforce to much larger Citrix and ERP solutions. All of these increase the demands on broadband capacity.
Unfortunately, a significant proportion of businesses in major cities and business parks have no access to fibre broadband. They are forced to pay for expensive dedicated circuits which can cost 10 – 20 times more. Although BT has said they will start some pilots in 2017 of Fibre to the Premise (FTTP) around business parks, as a whole, fewer than 2 per cent of premises in the UK have access to the technology. This compares to almost 40 per cent in the leading countries in Europe.
Finally, the move towards the Cloud for phone systems continues to grow apace. The latest figures from Cavell Group show that the Hosted Telephony market grew by 11 per cent. Also with the end of ISDNs announced for 2025 the SIP market has also shown strong growth at almost 10 per cent.
The premise based phone market continues to decline with Toshiba pulling out of the UK in 2016 and one of the market leaders Avaya was beset with rumours of Chapter 11 bankruptcy. All of this will create even more demand on broadband connectivity.
In summary, going into 2017 the UK is in the slow lane when it comes to technology and the short term prospects are not encouraging. The Government has made a start but needs to do more and faster to incentivise the industry to make the necessary investments.