What’s up with… Ericsson, opaque digital divide investment pledges, the broadband gear market

  • Now Ericsson faces an SEC probe of its dealings in Iraq
  • The ITU says it has received ‘pledges’ worth an estimated $24.49bn to help connect the unconnected - but how much of this is cold hard cash?
  • The broadband equipment market is in rude health, despite the ongoing chip supply crunch, according to Dell’Oro

Another investigation into Ericsson’s time in Iraq, a big money ‘pledge’ to bridge the digital divide and encouraging news from the fixed broadband market are the lead items in today’s news roundup. 

Ericsson’s Iraq nightmare just got even darker following the announcement that the Securities and Exchange Commission (SEC), the US body that regulates the stock markets and protects investors, has “opened an investigation concerning the matters described in [Ericsson’s] 2019 Iraq investigation report”. The Swedish vendor had previously warned that its admission that some payments made by Ericsson representatives prior to early-2017 had found their way into terrorist coffers could lead to punitive actions by the US authorities. The US Department of Justice (DOJ) previously ruled that Ericsson had breached the deferred prosecution agreement (DPA) reached in late-2019, the conditions of which included a fine of $520m. The DOJ is still delving into Ericsson’s dealings in Iraq, but the SEC was conducting its own separate probe, which has now resulted in the launch of an official investigation. Ericsson says it’s “fully cooperating with the SEC”. With the ongoing probe by the DOJ having overshadowed Ericsson’s first-quarter financial report, it now looks likely that the SEC investigation will cast a dark shadow over the second-quarter earnings presentation – due to take place on 14 July. Expect a new wave of class action suits against the vendor to be announced in the coming weeks…  

‘Connecting the unconnected’ is a very important task, given how many in the world still have no access to the kind of digital services that could improve their daily lives in many ways. So when the International Telecommunication Union (ITU) announced that the Partner2Connect (P2C) Digital Coalition, a multistakeholder alliance, had received more than 360 pledges “representing an estimated combined financial value of US$18.55 billion” to “expand Internet access everywhere as a key aspect of sustainable development,” that sounded fantastic, because, as the ITU noted, “some 2.9 billion people – or more than one third of the world's population – have still never connected to the Internet.” The announcement was made during this week’s ITU World Telecommunication Development Conference in Kigali, Rwanda, which was focused on aligning connectivity strategies with the sustainable development goals of the United Nations. So… that’s a lot of money! But why is the total value of the pledges “estimated”? Well, the ITU points out that the pledges are “not only financial – they also included ground-breaking commitments, policies and advocacy plans to bridge the digital divide, creating fertile ground where new partnerships and alliances for global connectivity can flourish,” and include “services, technical support, and other assistance.” Hmm… OK, so how much of this enormous total is actual financing – cold hard cash? When we asked the ITU, they told us that the pledges were now worth $24.49 billion, as support for the P2C Digital Coalition’s efforts to bridge the digital divide poured in. Well, that’s even better, right? But, to get back to the question in hand, how much of this is actual cash rather than “policies” or “plans” that have been assigned an estimated value by unidentified people? Despite asking a number of times, and rephrasing the question in multiple ways so as to be absolutely clear that we were asking how much of this near $25 billion in pledges is in the form of commitments to actual financing of projects that will help to connect the unconnected, we haven’t been given an answer. The ITU, though, went to great lengths to assure us that it “will not serve as the repository of funds related to these commitments, except in the case where a pledge might relate directly to support for an ITU initiative (such cases represent a small proportion of the 18.5 billion pledged – and relate mainly to joint advocacy pledges (such as the Broadband Commission pledge), and programmatic pledges (such as Giga, I-CoDI, Cyber4Good, etc).” It added: “The pledging entities themselves will be responsible for the discharge of those commitments – whether it’s spending a specified amount of money, or implementing specific policies, or initiating new programmes or advocacy actions.” So if nothing happens, don’t blame the ITU… The ITU also noted that it plans “to track and report on the implementation and progress of these commitments. We’ll shortly be launching a robust and rigorous online reporting platform, and we’re planning to issue a tracking report, to be published annually, from next year, possibly linked to regional P2C events, where pledgers can report on what they’ve done, and new partners can come onboard. We’ll be announcing this new reporting platform… as soon as it’s ready.” But the question about how much of these pledges is actual financing goes unanswered, at least for now. More information about what might actually happen if the pledges come to anything can be found in this announcement.

Despite supply chain constraints, the fixed broadband access equipment market grew by 14% year on year during the first quarter of 2022 to a value of $4.4bn, according to market analysis from the Dell’Oro Group. The growth was driven by demand for passive optical network equipment used in fibre-to-the-premises deployments and sales of fixed wireless access customer premises equipment. “Despite all the challenges with supply chains, logistics, and labor, service providers continue to invest heavily to expand their fiber broadband networks, particularly in North America,” noted Jeff Heynen, vice president of broadband access and home networking at Dell’Oro Group, in this press release. “Many of these deployments are to deliver multi-gig services, as operators look to stay one step ahead of their competitors,” he added.

South Korean operator KT Corp. unveiled plans to invest a total of 27tn KRW ($21.5bn) in the development of network infrastructure, artificial intelligence (AI) and cloud computing by 2026, The Korea Herald reported. Of this amount, 12tn KRW ($9.5bn) will be invested in AI, cloud computing and media content projects, including the creation of automated customer service centres and robotic services, alongside datacentres and hyperscale AI computing. Another 3tn KRW ($2.3bn) is reported to have been allocated to supporting startups and potential strategic tie ups with investees. The telco is also tipped to have set aside some 12tn KRW ($9.5bn) for network infrastructure and research and development efforts, with a particular focus on high-speed wireless connectivity and exploring 6G and other next-generation standards. It has also committed to creating 28,000 jobs over the next five years, according to the media report.

Philippines-based operator Globe Telecom is tipped to be considering an option to sell approximately half of its tower assets in a deal valued at $1.5 billion. Bloomberg reported that the sale would include around 6,000 of the company’s towers. The potential move is at an early stage of identifying possible bidders with the help of an adviser but there are no assurances that an actual sale will materialise, according to unnamed sources. Globe Telecom told the news agency there was no board approval for a sale or leaseback transaction covering its tower portfolio at this stage. However, the telco reportedly added that it is working with different tower companies for its network deployment. Globe Telecom’s main rival in its domestic market, PLDT, recently agreed to sell a total of 5,907 telecom towers in deals valued at 77bn peso (PHP) ($1.47bn).

The US Federal Communications Commission (FCC) announced yet another batch of support to close what it dubs “the homework gap”. As part of its Emergency Connectivity Fund (ECF) programme, it will set aside more than $244m to support 259 schools, 24 libraries and one consortium across the country for the upcoming 2022-23 school year. FCC’s total support for students in the US, as part of the ECF since its launch in May 2021, amounts to $5.1bn to date.

Telefónica's Tech has completed the acquisition of European cloud services specialist BE-terna for approximately €350m. The deal, first announced just a month ago, gives Telefónica Tech, the Spanish telco’s cloud, AI and cybersecurity services division, a broader geographical presence and boosts its professional and managed services capabilities across Europe. BE-terna has more than 1,000 employees across 28 locations in Austria, Germany, Switzerland, Slovenia, Croatia, Serbia, Denmark, the Netherlands, Sweden and Norway. 

UK regulator Ofcom opened a consultation on establishing a spectrum licensing regime for the use of drones for commercial services delivery. The authority has been working with the domestic government and the Civil Aviation Authority (CAA) to come up with a new approach for authorising the radio equipment needed on the drones. “We are proposing to introduce new spectrum licences that allow operators to use mobile and satellite networks to achieve this,” the regulator said. The current permissions for drone operation are “unsuitable for the services offered by the latest generation of drones”, according to Ofcom. As a solution, it has proposed “a range of technologies” to be authorised so that more advanced types of drones which, it pointed out, increase in both size and complexity, are allowed to take off. Notably, it pledged the new licences would focus on the use of safety equipment so that drones “operate safely in UK airspace”. Read more.

- The staff, TelecomTV

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