Space; the final telco frontier

Reach out, reach out and touch someone

Everyday there is a news story about SpaceX, Blue Origin or Virgin Galactic. We are fascinated by the hubris of billionaires Bezos, Musk and Branson to expand humanity off of Earth and out into space. The more I delve into the NewSpace industry , the more I am astounded by how much it reminds me of my industry, telecom. Let me explain.

The late 1980’s and the 1990’s were a time of disruption and change in telecommunications around the world . Deregulation and liberalization were in vogue as competition was introduced into previous monopoly markets. It started with upstart competitors like MCI and Sprint trying to break into AT&T’s long distance monopoly in the USA. Then the Telecommunications Act of 1996 in the US creating a whole new batch of mini-Bells.

The UK similarly saw the privatization of government owned British Telecom in 1984 and its monopoly was challenged by Mercury, a subsidiary of Cable and Wireless communications . Other countries , Canada, Australia, New Zealand, the Netherlands followed suit. It spread globally.

Governments worldwide embraced privatization of their former telco monopolies (PTT’s or Postal Telegraph & Telephone) to become publicly listed commercial entities and introduced competition into these markets.

Simultaneously we saw the rise of the worldwide Web and consumers were introduced to the Internet. Dial-up modems provided access at first, but were quickly replaced by broadband connections. To feed the growing demand for bandwidth for competitive telecom and the Internet there was a flood of new fiber optic cables laid. According to KMR Research about 80 million miles of optical fiber was installed between 1996 and 2001 in the USA alone. New submarine fiber cable routes between continents were planned and laid. The forecasts were that Internet traffic would double, every year, so we needed MORE.

Telecom was the new Wild West, the new Klondike gold rush. Capital markets paid attention and newly minted companies that had telecom, broadband or Internet in the name got funded to operate in this new environment of explosive growth. The stock markets in Canada, the USA and Europe were filled with telecom and broadband backbone providers, submarine cable companies , hardware vendors. It was as big if not bigger than the dot com boom.

My own career has been imbued by this zeitgeist . After engineering school at Waterloo I started at CNCP, which was owned by CP and CN the two giant Canadian railways. It operated the Telex network across Canada and provided the main competition to the incumbent provincial telephone monopolies. When long distance was finally deregulated in Canada I was part of the management team of ACC TeleEnterprises which we grew and took public on the Toronto and Montreal exchanges. At ACC we also had the worlds first trans-Atlantic private line that hooked up to the public phone network connecting London, UK with switches in Toronto, Montreal and Vancouver. After ACC, I started AurorA, which provided international telecom services, both voice termination and bandwidth to the competitive industry in Canada, the USA and telcos around the world.

So why do I write today about this ancient history ? Because the nascent NewSpace industry reminds me very much of those days in telecom. The parallels are tremendous.

Access to space used to be limited to governments, specifically those of the United States, Russia and China. The “Space Race” in the 1960’s between the Soviet Union and the Americans during the Mercury, Gemini and Apollo programs could only be funded by national governments . Government contractors built the rockets and other equipment and they were typically subsidiaries of the defence industry. Those contracts were for cost-plus and programs were large, expensive, bureaucratic and slow.

About the time of the go-go telecom years we saw the beginnings of a commercial space sector.. The race to the moon had given way to government cutbacks to NASA; the focus in the ’90s became the Space Shuttle program and the International Space Station (ISS). Telecom dreamers wanted to put up broadband in space, a way to “connect the unconnected”. This led to ideas like Iridium, Teledesic and GlobalStar that were able to access the public markets during the telecom boom to fund their dreams. There were also startups backed by legacy aerospace companies like Boeing, Lockheed and Alcatel. They all sadly failed and went bankrupt. (I wrote a review on a great book on the history if Iridium here).

Then came SpaceX. Through the vision of Elon Musk, his newly minted fortune from PayPal and the incredible fortitude of a young team of talented engineers, SpaceX was able to challenge and disrupt the Space industry in the early 2000’s. They were able to provide a new way to build rockets, using the agile, iterative approach of Silicon Valley. Their unlikely success revitalized a commercial space sector by dramatically lowering the cost of launch.

Thus was born the NewSpace industry. There have probably been about 1000 start-up space companies in the last 6 to 8 years. It was hard for them to get funding initially as many are very capital intensive and there really were no space focussed Venture capital firms until the last few years. Running a space company meant always looking for funding to keep the company alive.

Then came SPACs. Richard Branson’s Virgin Galactic needed more funding and he was able to get it in 2019 by going public via a SPAC deal with Social Capital Hedosophia run by Chamath Palihapitiya (who among other things is a UWaterloo engineer also !) to become the world’s first publicly traded commercial human spaceflight company.

Other space companies have since taken the opportunity to go public also via the SPAC route such as AST Science, Momentus, RocketLab, Astra, Spire Global, BlackSky, Redwire and Arqit Ltd. SPAC funding typically provides a space company with enough capital to fully fund their business plan so they can focus on execution. Today the space sector is worth about $400B but Morgan Stanley predicts it will be trillion dollar industry by 2030. That is probably conservative given the pace of change.

This is why I get excited about the NewSpace industry. What started off as a government monopoly became a competitive commercial industry fueled by the public stock market. Disrupted by new ideas, new processes and new technology. The new mantra is “You can’t spell space without SPAC” !

My final observation, is that even though launching satellites, hardware and humans into space does take a rocket scientist, in the end much of the applications really boil down to this being a telco in space. Whether it is providing broadband internet like Starlink or OneWeb (there is that same “connect the unconnected” dream), or Internet of Things (IoT) capabilities like Swarm or Kepler, Cellular or 5G from space like AST, Lynk or OmniSpace or any of the Earth Observation platforms (visual, SAR, RF or thermal) that connect their data stream to hyper provider clouds like AWS, Azure or GCP it all comes down to moving bits around, just like a telco. We’re just extending the tower up a little higher.

Ad Astra (Latin for “To the Stars”)

MVNO – Provide Exceptional Customer Experience

cheerful multiethnic women browsing smartphone in park
Photo by Charlotte May on Pexels.com

In early January this year, Toronto-based Data On Tap received CRTC approval for its carrier brand “dotmobile” to become Canada’s first full Mobile Virtual Network Operator (MVNO).

From their press release on Jan 8 dotmobile notes the following

Generally speaking, a Full MVNO operates essentially the same technology as a mobile network operator, but without owning the radio access network (ie. cell towers). Instead, the Full MVNO’s core network connects to one or more existing radio access networks owned by other network operators, similar to how that same mobile network operator roams on other networks.

To better understand how similar they are, let’s look at the big three in Canada. They all provide nationwide coverage with their networks. The big guys do this by sharing their networks. For example, Bell and Telus each have cell towers that cover only half of the country, but they share them with each other so that their customers get national coverage. Each of them also operates multiple brands on their networks, which means Bell, Virgin, Lucky, Telus, Koodo, and Public Mobile all connect to the same network.

So since Full MVNOs operate a core network just like everyone else, and everyone else is already sharing networks, the difference really just boils down to whether you own any of your own towers or not.

A wireless provider’s core network is responsible for almost everything other than how many bars of signal your phone gets. It takes care of the basics like routing calls, text messages, voicemail, and connecting you to the internet. They can also do a lot more. Modern core networks that are built primarily as software can better prevent spam calls, seamlessly switch calls from a phone to a laptop and back again, support worldwide High Definition calling over Wi-Fi and LTE, or even integrate your AI assistant into a call. That’s just scratching the surface.

One of the key things that any new MVNO will need is the ability to terminate their customer’s international voice calls. Since all the calls originated on a cellphone are compressed by its codec, it is imperative that only premium quality voice routing be used to terminate the calls, especially when they are calling overseas. An MVNO wants the best-in-class solution to transport their calls over high quality routes with minimal trans-coding so that their customers receive the highest quality of experience.

We expect a decision from the CRTC in early 2021 to grant MVNOs in Canada mandated access to the networks of the big guys. When this access is granted we will see dotmobile and other carriers approved to become full MVNOs enter the Canadian mobile services marketplace. AurorA will be there to cheer them on and also to provide them with their premium quality international termination, as well as any other international telecom services that they may need.

Competition is good for consumers and Canadian businesses, especially when they can be provided with premium quality services. I look forward to the future that mandated MVNO access will bring to Canada.

Cellphone Competition Coming ?

Left is MNO Rogers – right is the MVNO Ting – from Twitter user YOZZO

Last week the CRTC finished up two weeks of hearings as a Review of Mobile Wireless Services. The subject of the 9 days of hearings were whether to mandate (ie force) the current mobile network operators (ie Bell/Telus/Rogers, Big 3, Goliaths) to provide wholesale MVNO (Mobile Virtual Network Operator) access to their networks to smaller carriers (ie Davids). In short to open the market up to competition.

There were many parties giving evidence and opinions. The Big 3 are very against being forced to sell access to their networks. Very against. They cite that the market is already competitive, that mandating MVNO’s would curtail their ability to spend on network expansion (both to rural/remote areas and upgrading to 5G). And they point to a submission from the Competition Bureau that pro-MVNO regulation would harm smaller facilities based competitors like Videotron, Shaw, Eastlink and Xplornet. Telus CEO Darren Entwistle even threatened to cut $1 billion in network investment, 5,000 jobs and philanthropic giving if CRTC dared to mandate MVNOs.

Telus threatens to euthanize animals if CRTC approves mobile virtual network operators – from The Beaverton

Is the Canadian mobile market really competitive ? The reason this procedure was even going on was due to the outcry from Canadians about their cellphones! It seems self evident that Canadians view the current situation as unfair and that the Big 3 are acting as an oligopoly. They hate their current providers (see here) This came up more than once in various submissions, including co-ordinated rate plans (one moves they all move), the smoke-screen of flanker brands to confuse the market etc.

There were other parties like TekSavvy, Distributel, Tucows, CNOC, Ice Wireless (Iristel) and others arguing in favour of MVNO’s. They argued that as Full MVNO’s they would not own spectrum or operate their own radio access network, but purchase that from the Big 3 . Except for the operation of such a radio access network, they would be responsible for all other aspects of their operations such as sales, marketing, billing and the operation of a core network. From there they could increase competition in the marketplace to provide more services to Canadian consumers and businesses.

Twitter commentary on competition from MVNOs being more than “resale” or a free ride

We won’t know the outcome from these hearings for a while, maybe not until 2021. I am watching this process carefully; not because AurorA plans to become an MVNO. Almost my entire 35 year career has been on the competitive side of the industry, competing against the various incarnations of the Big 3. And they are formidable competitors indeed who do not cede an inch of any markets that they consider as theirs. My rooting interest naturally falls to the underdogs, the Davids competing against Goliaths.

If MVNO’s are mandated though, it could also open up a raft of new mobile competitors . Those competitors would need premium quality termination for their overseas calls. Mobile calls originate on cellphones and already undergo compression just to reach the core; from there you want to ensure premium quality so that the caller gets through perfectly. An LCR here makes zero sense; if the caller wanted a cheap call they would use a free app on their phone like Skype or WhatsApp. If they use the phone it has to be high quality. And I know just who has the best quality international voice termination !

2020 Vision

Photo Credit ; Carmi Levy, @carmilevy more at http://writteninc.blogspot.com/

The world does not need another blog post about predictions or trends for the coming New Year. Or another Top 10 list. Those are far too common and overdone. For this years first blog post, I thought I would instead focus on a few topics that I see becoming of increasing importance, especially to service providers in the competitive space against Big Telco. You can read about 5G, AI, IoT and other acronyms elsewhere.

Telecom Fraud
The last few years have seen a dramatic increase in fraud on our networks. Hacking by criminal networks is easier than ever and they avoid prosecution by doing it across international borders. The migration to IP networks and softswitches have opened up new avenues fro the bad actors to attack. This trend shows no signs of abating, meaning that as an industry we must put more time, effort and manpower into safeguarding our networks and businesses to avoid catastrophic losses.

The Decline of Voice
Worldwide voice revenues continue to decline. We have highlighted this trend before here. Silicon Valley giants like Microsoft (Skype), Facebook (WhatsApp, Messenger), Apple (FaceTime) and Google have sucked away a lot of the consumer voice and messaging traffic from worldwide networks. As service providers we need to look for other sources of revenue rather than trying to compete for a slice of an ever shrinking pie.

This is where looking at other market sectors such as Enterprises and SMB for growth that are underserved or poorly served by Big Telco come into play. Or looking for markets like International MPLS data circuits or cloud connectivity where Big Telco does not have 90% market share. Finally, the best way to compete against “free” services is not to offer low cost service; rather it is to offer premium, high quality services that Silicon Valley and Big Telco are not equipped to provide. (more on quality here)

Recession is coming
We are now in one the longest, if not the longest, economic expansions in the history of the United States. History has shown that this cannot keep going indefinitely, a recession is coming soon. When the US gets a recession, Canada gets an even bigger one. As competitive service providers we must be prepared for this on two key fronts; expenses and top-line revenue.

Now is the time to tighten the screws on your organization from top to bottom. Examine all costs, especially all S,G & A line items to see where savings can be had. Billing systems, payment services, any form of overhead costs should all be examined and cost savings sought wherever possible.

Top-line revenue ? Here is a counter-intuitive tip from a veteran of many boom-bust cycles. Times of recession can often be times of the best top-line growth for companies like ours. During hard times, business customers are more receptive to moving away from their current providers to be able to save money. This is when they will look to competitive suppliers. So have your marketing and especially your front line sales staff prepared for this opportunity.

I hope these topics gave you few ideas for your business for the coming year. As always, Amitel and AurorA are here to help. Reach out to me to have deeper discussions on the above, or any other pain points you may be experiencing. Looking forward to growing together with you in 2020.

Your Friend in Telecom

Timo

Thanks again to Carmi Levy, @carmilevy for use of his superb photograph. Follow his work at http://writteninc.blogspot.com/

2019 Canadian ISP Summit – Day 4

Day 4 ? But the conference only ran from Nov 4 to 6 ? How could there be a Day 4 ?

Well when you are self-employed like I am it takes a full day AFTER the conference just to try to get caught up. There is the large backlog in the email inbox, phone calls to return, meetings to attend.

There is the followup from all the social media posts. I made the commitment to blog each day of the Summit, and really appreciate that you readers took the time to follow along on my website and left great comments on my Facebook, LinkedIn and Twitter feeds.

Finally, there is the followup from the pile of business cards that I came home with. I will connect with you all on LinkedIn and Twitter, and send you some details on AurorA and Amitel to remind you that when you need something “International”, contact me, “Your Friend in Telecom”.

Looking forward to next year’s Canadian ISP Summit, Nov 2 to 4, 2020, the 10th anniversary edition.

2019 Canadian ISP Summit – Day 3

Fireside Chat with Konrad Von Finkenstein and Anja Karadeglija Photo Credit ; Canadian ISP Summit twitter feed

The main focus for the final day of the ISP Summit was regulatory. Former CRTC Chair Konrad Von Finckenstein held a fireside chat with Anja Karadeglija of the Wire Report. That was followed by a regulatory panel with Chris Tacit, Michael Geist and Laura Tribe moderated by Christine Dobby from the Globe & Mail.

Many hot issues were covered including MVNO’s, insights from KVF as to how decisions are made at the CRTC and the need for speed and certainty, the difficulty in establishing costing and the retroactive compensation to the competitive industry for overcharging by the incumbents that is being challenged in court. There were good questions from George Burger and Matt Stein to the former Chair challenging his viewpoint on making the decision retroactive for 3 years considering how long it took to make the decision.

Chris Tacit got a laugh from the audience when he mentioned the history of the incumbents tactics in fighting decisions that they don’t like back to Decision 92-12, when the CRTC opened up long distance market to competition. Some panelists and audience members may not have remembered 92-12, actually they might not even have been born yet. Of course that is when I was at ACC Long Distance as VP, Network so I lived and worked through those long distance wars and remember them well. And yes, Bell and the telcos were anti-competitive then and they still are now.

The panel also expounded on what the new minority Federal government might be able to accomplish in its mandate, as well as gave predictions on ministers such as Navdeep Bains and whether he would stay on at ISED or be given a different portfolio (consensus seems to be that he would get a new file) and that Minister Rodriguez might stay on Heritage.

Personally, I feel that a minority government can usually only accomplish a few items in its mandate. There are other , bigger files that will need attention right away such as Alberta and the pipeline issue. There may not be enough time or political capital to get much done on telecom or tech issues.

Once again the Canadian ISP Summit proved to be a great, action packed three days. The content was excellent, the networking was tremendous and it was great to see old friends and make some new ones.