An entrepreneur, international telecoms experts and Chairman of Cambridge Wireless, Dr Cleevely identified the big problem with the communications industry at the present time as the fact that the industry is having to ‘run fast’ to stay in the same place. Between 2004 and 2009, telecoms revenue grew just 1.7% (radio and television revenue also grew by just 1.2%and 2.1% respectively in that period), whereas there was a ten-fold increase in traffic. Mobile communications fared better in the same period, but despite a doubling of revenue, traffic still increased by a staggering 2300%.
This increase in mobile traffic can be largely attributed to increasing usage of devices like the iPhone and Android smartphones, and it has become a big enough issue in the eyes of European mobile operators for them to call for companies like Apple, Google and Facebook to contribute towards mobile bandwidth costs and network upkeep.
While the largest companies such as Apple, Microsoft, Google and Vodafone are still making huge revenues, the lecture identified the problem of increasing globalisation and the threat of stagnation as a threat to the future of the UK telecoms market. It seems that the most successful companies are those that provide the whole package to consumers – including successful provision of devices, software and content – Apple being a prime example of this.
This is contributing to a potential lack of UK innovation, but the structural problem in the UK is one of procurement, not capital shortage. Dr Cleevely argued that in the current economic climate, there needs to be procurement investment in SMEs by Government to help fend off globalisation, and help grow and diversify the UK communications industry.
Dr Cleevely also cited deregulation as something that would have the potential to drive innovation in the UK telecoms industry. Research has revealed that wireless technologies such as telemetry, RFID in retail and WiFi are the most profitable. Coincidentally, these are all disciplines that use unlicensed spectrum. The radio spectrum is an under-used resource which has the potential to accommodate far more innovation than is already taking place.
It was suggested by Dr Cleevely that if operators were forced to open their networks to things like femtocells, where people can provide their own base stations, this would result in a torrent of mobile innovation. Femtocells are small cellular base stations, designed for use in a home or small business. It connects to the service provider’s network via broadband to extend service coverage indoors. Use of femtocells would result in an increase in network capacity, but we would need a change in regulation.
There is an uncertain future awaiting the UK telecoms industry that’s for sure, for many years the economy has been enabled by telecoms, but now the industry is failing to bring in revenues relative to the level of enablement. Time will tell if deregulation is the right answer, but in an industry that has been regulated for a long time, new competition requires lots of investment.
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