IoT Needs Next-Generation Infrastructure and the UK Aims to Provide It

IoT infrastructure needs 5G networks

All around the world, cities, and municipalities are clamoring to make infrastructure plans designed to support the 5G. The infrastructure plans will also help other high-speed data networks that will enable the IoT future. They’re building because they know the opportunity for economic growth that will come along with the next generation of IoT technology. The UK has been impressive in its preparation in IoT needs for next-generation infrastructure.

Substantial growth has always been worth a fortune to whichever locality becomes a hub for future IoT development.

The economic prize is significant, with experts predicting that spending in the IoT market will grow to $520 billion per year by 2021. Although the necessary 5G wireless networks are already being rolled out in various places around the world, it’s something of an open secret.

The real hurdle facing many areas is a shortage of available fiber-optic infrastructure to form the backhaul networks.

The available fiber-optic infrastructure will unlock the potential of the new wireless technology. In the US, analysts at Deloitte estimate that upwards of $150 billion in new investments will be required to support the data capacity demands. That’s the bottom tier that the 5G wireless networks are about to unleash.

So far, there’s little evidence that private investment is going to come anywhere close to that total. There appears to be no political will at the moment to include a national fiber plan in a forthcoming federal infrastructure bill. In the UK, however, that’s not the case.

In July of 2018, the British government released a detailed national broadband strategy that aims to extend full fiber coverage to every home by 2033. It’s an ambitious goal that’s backed by a pledge of up to £5 billion in subsidies to underwrite fiber rollouts in rural areas. The UK is making sure nobody gets left behind by profit-focused private network operators.

The plan, if successful, will create a fiber backhaul network capable of handling the massive uptick in data expected to come from 5G networks. The project includes providing ultra-fast wired internet services to every home. The only real question that remains is whether the plan will work though it’s too soon to pass judgment yet.

Here’s a look at how the full fiber rollout is going in the UK.

Included here are the challenges faced by the company charged with doing the work, and what they’re doing to try to stay on track.

Understanding the Players

To understand what’s happening in the UK about upgrading the nation’s aging copper infrastructure to an all-new, full-fiber network. It’s important first to understand a little bit about how the telecommunications market works there.

First, unlike in many other capitalist markets, the entirety of the legacy copper telecommunications infrastructure in the UK is the property of a single company: British Telecom (BT). That network, some of which is over 140 years old, forms the core of almost all current phone and internet service in the nation, save for the customers served by available cable television operators.

To make sure that the upgrade to a full-fiber network wouldn’t be bogged down by BT’s focus on its bottom line. The British telecommunications regulator OFCOM mandated that the national network be spun off into a separate entity.

The new company would be bound by a legal mandate to serve all customers equally and committed to making the eventual transition to a full-fiber national network. Also, the government hoped to spur competition in the overall broadband market. Appearing to have worked, with more than 500 separate companies now offering services via additional networks.

They’ve also encouraged consumers to shop around for broadband, which has fueled interest in comparing broadband deals. Taken together, OFCOM’s actions seem to have created the right impetus for other fiber companies to move forward with its network upgrade plans.

The Progress So Far

IoT needs next generation infrastructure.
Fiber to the home equipment. FTTH internet fiber optics cables and cabinet, splitter.

As you might expect, the size and scale of the work required to roll out a comprehensive, fiber-to-the-premises (FTTP) network in every corner of the UK are quite massive. So far, Openreach claims that they’ve already got over 900,000 premises connected, with plans to reach a full three million by 2020. Where does the U.S. stand in comparison?

While that sounds ambitious, it represents just 10% of the number of premises nationwide that will eventually require an upgrade, highlighting how far fiber has yet to go. When you consider that much of the work done so far has focused on clusters of locations within urban centers, it’s also reasonable to expect that the brisk pace of the rollout won’t continue for very long.

Still, there’s a reason to be optimistic about the odds of meeting the ambitious government broadband plan. They’ve already announced that the city of Salisbury will be the first location to have complete FTTP infrastructure, and 1Gbps internet access available for any who require it.

They’ll join another 25 locations where similar rollouts are already in progress and in various stages of completion. All told, the company claims to be adding 13,000 new FTTP connections each week, which is a good sign given how many locations remain.

The Obstacles

Some factors could hinder the progress that smaller companies are making, and not all of them are within the company’s control. The most significant factor is the ever-present shadow of Brexit, which is already choking off some of the sources of labor and skills that Openreach and other large companies rely on.

That’s making it challenging to make sure they can recruit the new engineers needed to build and maintain the new fiber network at a time when they can least afford a slowdown.

Also, the company worries that the split from the EU could sever its’ supply chain operations, starving the company of the very technology and supplies it needs to continue the project.

Then, some internal matters could yet stymie Openreach’s efforts. To begin with, the company had to build out an executive management structure separate from BT a few short months ago. They now face the challenge of retaining their new leadership team for the duration of the project.

Retaining top talent at executive levels requires careful planning and a conscious effort to achieve.

It’s also an issue that could affect their bottom line, as well. All they need to do is to look across the Atlantic to the US to see how a tight labor market affects executive retention. There, according to executive retention guides, over 51% of organizations provide bonuses to their CEOs.

The same is also true of other top-level executive positions, and all together, those bonuses add up to a significant amount of overhead. Still, such compensation packages are a must to prevent high turnover.

Last, and not least, Openreach still faces the challenge of getting consumers to sign up for their new FTTP offerings. Sign-ups have to be done via the third-party resellers that make use of their network. If they’re unable to do so, they risk overextending their reach without sufficient revenue to continue the rollout – which would doom the plan and guarantee that the government’s 2033 deadline cannot be met.

The Bottom Line

Man connecting network cables to switches
IoT community and the UK will be a fertile ground for developers and hardware designers. Photo: Adobe Stock

The UK’s government’s national broadband strategy.

The raft of challenges notwithstanding, it appears that Openreach is staying on track to meet the ambitious goals laid out. At the very least, they’re doing their utmost to manage what is undoubtedly one of the most significant infrastructure projects in the history of the UK.

For the IoT community, the early results alone guarantee that the UK will be a fertile ground for developers and hardware designers in the coming years, even after the dust from Brexit settles and the political and economic impact becomes apparent.

It may be an excellent time for IoT entrepreneurs and others in the industry to look to the UK to form a base for future operations.

Established industries and businesses are relocating elsewhere amid the uncertainty, and that could create a vacuum in which a new IoT industrial base could flourish. These facts, surrounded by a next-generation data infrastructure and with the wind at its back.

It’s still too early to render any judgments about the future of full-fiber infrastructure in the UK, but the smart money should be on Openreach and their efforts to provide the backbone of the IoT industry in the UK for the next several decades to come.

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