Page 24 - Trends in Telecommunication Reform 2016

Meanwhile, satellite operators Iridium and announced plans in March 2014 to work together
Globalstar have recently raised funds to launch on a new network-sharing initiative to reduce costs
a second generation of low Earth Orbit (LEO) and to improve rural broadband coverage .
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constellations to provide broadband and voice
services. In addition, SpaceX, LeoSat and others
have plans to invest a total of around USD 13 billion 1.2.5 Tech clusters
to USD 18 billion in new LEO constellations
designed to provide global broadband Interesting examples of how to encourage
connectivity . Their plans seem commercially broadband investment can be found in the
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feasible given the lower cost of satellites and the "Tech City" initiative and through global finance
development of the broadband market. technology intiatives. Tech City is a cluster of
technology companies and support-service firms
based in East London and endorsed by the UK
1.2.4 Market consolidation government and the Mayor of London . It is
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designed to attract investment in technology firms,
Operators use consolidation and network-sharing creating jobs and economic growth . In the last
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strategies, mainly in developed markets, to three years, Tech City has attracted investment
generate efficiency gains and cost savings to fund from global markets, including the United States,
further network investments and to develop Europe and Asia, and from investors such as
innovative services. Mobile network operators Rekoo, Facebook, Google, Twitter, Amazon, Cisco,
(MNOs) need scale to compete for 4G licences, Intel, Microsoft, FourSquare and Pinterest . As a
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invest in mobile network infrastructure and result, UK operators Openreach and Virgin Media
develop services that rival their competitors’. have made announcements to invest in affordable,
Take BT’s USD 19 billion acquisition of mobile high-speed broadband infrastructure and services
operator EE in the United Kingdom, for example. in the area .
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At first glance, the deal seems designed to
expand BT’s market share and service portfolio Another noteworthy trend is investment in the
by offering a "quadruple play" package. But there financial tech field (or "fintech"), an industry that
may be additional benefits to both BT and EE develops technology solutions for the finance
from synergies in subscriber acquisition costs sector. Global fintech investment tripled to USD
(SAC) and lower customer churn, as evidence 12.2 billion from 2013 to 2014, creating mobile
from quadruple play offerings in other European payment solutions, providing easy access to
markets shows. On the negative side, however, "in- financing, and reducing fraud and identity theft.
market" mergers and acquisitions can be expensive These solutions and processes are all factors in the
and time consuming, and success is uncertain. development of a mature Internet ecosystem .
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Silicon Valley is the world leader in attracting
Operators in developed markets are under fintech funding, with over USD 2 billion in
increasing pressure to reduce costs as revenue investments in 2014 alone. European investment
levels decline. When network coverage becomes totalled USD 1.48 billion with the UK (mainly in
less of a competitive differentiator, operators London’s Tech City) accounting for 42 per cent of
may need to consolidate networks (through European FinTech deals in 2014.
network sharing) as a means of moving away from
infrastructure investment and toward developing
innovative services. In France, Bouygues Telecom 1.3 PPP investment strategies in
and SFR concluded a network-sharing agreement broadband infrastructure
in February 2014, enabling them to reduce cell
sites by about 40 per cent. This has generated Telecommunication operators make routine
savings of about EUR 100 million per year for investments in core, backhaul and access
Bouygues Telecom and EUR 200 million per year networks by utilizing cash stockpiles, raising
for SFR . private financing, or, as previously mentioned,
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through consolidation. These "business-as-usual"
Moreover, network sharing is not limited to investments are well rehearsed and require little
developed markets. For example, eight major regulatory or govermment intervention (and are
mobile operators in the Arab States and Africa therefore not extensively discussed in this report).

6 Trends in Telecommunication Reform 2016