Wednesday 13 December 2017

Eight technology trends for 2017

From telecom operators' battles to the growing influence of Amazon and smart homes, 2017 will be a transformative year for the tech ecosystem

Ireland will be at the forefront of a number of technology trends next year
Ireland will be at the forefront of a number of technology trends next year
Adrian Weckler

Adrian Weckler

1. A battle royal among Ireland's telecoms networks. Each of Ireland's five big network operators - Eir, Vodafone, Virgin, BT and Three - have distinct challenges over the next 12 months.

Eir has three main issues. It needs to win the State's subsidised National Broadband Plan tender to maintain its long-term position as the pre-eminent connection network in Ireland. It is also in an arms race with Vodafone's ESB joint venture (Siro) to build out fibre broadband connections independently of the State's own plans. It also perennially faces the question of whether it will be put up for sale at some point.

Amazon PrimeAir
Amazon PrimeAir

Other than its bid to win the National Broadband Plan tender contract and its competition with Eir, Vodafone also needs to keep investing in its own mobile network. Group chief executive Vittorio Colao recently admitted that Vodafone's main objective was to stay in the top two networks in every country to keep its business customers.

Having spent more money than anyone else on network upgrades, Vodafone is probably secure at the top in Ireland for another year. The company has seen many of its low-yielding prepaid customers defect to rival operators, but has kept its higher-yielding postpaid and business customers.

So while Vodafone's share of the overall mobile market in Ireland has fallen over the last year, its share of the revenue spoils from the market has not fallen at all.

Three continues on its journey of integrating the old, under-invested O2 network into its own. That has caused considerable pain at times, both to the company and to its customers. But 2017 should see the company move forward to a position where it can focus again on head-to-head network quality battles with Vodafone rather than chasing its own tail to make sure the old O2 network isn't causing problems.

Trinity in Dublin
Trinity in Dublin

What of Ireland's smaller 'virtual' mobile operators? Here, it's a case of distribution beating most other factors. With 6pc of the mobile market in Ireland, Tesco Mobile has become a serious force in the industry. It has twice as many customers as all other virtual operators (Virgin Mobile, iD, Postmobile and Lycamobile) put together.

This is because of its retail distribution presence: it's easy to sign up to the service and get a cheap prepaid phone at a Tesco store. In theory, the same could be said for Postmobile, the virtual mobile network owned by An Post. But most post offices don't sell phones. Next year is a critical year for this entity - An Post has invested significant sums in its rebranding campaign from Postfone. It must start to gain more customers soon.

2. A key year for Virgin Media in Ireland

Of the five big network operators in Ireland - Eir, Vodafone, Virgin, BT and Three - Virgin Media's issues in 2017 are arguably the most interesting.

Under serious market attack in its traditional activities (broadband and television), it must figure out a way of returning to growth.

Its TV subscriptions have fallen by over 30pc in recent years at the same time as its main competitor (Sky) appears to have held fast, and new entrants such as Netflix, Eir and Vodafone have started grabbing market share.

Its broadband penetration has plateaued due to the geographical limitations of its network reach (under half of Irish homes). Virgin's main concern here is the growth of fibre networks from Eir and Siro. At present, it still wins out in most head-to-head battles on quality and speed with competitors. But as soon as genuine fibre-to-the-home alternatives grow in availability, that dominance will be under sustained attack. By the end of 2017, both Eir and Vodafone's ESB joint venture (Siro) will each have at least 100,000 homes within connection reach of their new fibre broadband and TV services.

Virgin executives know all this too well. The company's response is a bold one, investing in content creation through the acquisition of TV channels TV3 and UTV Ireland. Ultimately, billionaire Irish-American owner John Malone is a long-term investor in his businesses and doesn't quit easily. Is Virgin about to do a serious pivot into greater programming investment a la Sky? It seems like the obvious, if expensive, choice. The year to come will be a fascinating one for Virgin Media in Ireland.

3. A ray of light for tech companies seeking office space in Dublin

A lack of office space in Dublin continues to damage the city's potential. Policymakers and planners, who don't depend on industrial progress to get paid, have largely been indifferent to this trend and are generally content to leave it to conventional Irish property economics.

However such economics are starting to catch up. In 2017, some extra office space will come on stream and there are signs that this will speed up in 2018. Property agents say that the amount of office space offered will double in 2017 over 2016 levels and may double again in 2018 through 2020. In Dublin city centre, it is now hard to look in any direction without seeing several cranes in operation. There may even be an oversupply in five years as developers increasingly convert old buildings into modern offices.

4. Another year waiting for rural broadband

When the National Broadband Plan was announced in 2012, only cynics would have suggested that contracts would not yet have been signed to build the network going into 2017.

Yet that is where we are today. The Government is still trying to make sure it has the right process in place for its State-subsidised network, which promises to deliver fibre broadband to every home in the country. At present, there are three short-listed bidders: Eir, Siro. One or more of these three are to be selected in 2017 with connections to people's homes and businesses set to begin sometime in 2018.

It really can't come fast enough. The most recent broadband surveys show that some areas of Ireland are struggling with broadband speeds insufficient to load email messages or perform basic Google searches.

One-in-three Irish broadband users get under five megabits per second (Mbs), which is inadequate to perform most online tasks in a typical household or small business. Other research suggests that one-in-three Irish people say they might have to relocate to a nearby town or city for work reasons if internet connectivity remains unavailable.

5. Better mobile coverage is on the way

In some parts of Ireland, poor mobile coverage is considered as much of a scourge as a lack of proper broadband.

Thankfully, 2017 looks like a turning point both in actual coverage and in official attitudes to it. A series of regulatory and supply-side measures, together with greater demand from phone users and less oxygen given to protesters and objectors, should mean that the number of blackspots around the country will decrease this year.

The Government will start the ball rolling with new rules that mean operators don't have to pay development fees to local authorities for the right to build out their masts and networks. Such authorities are also now to have a single point of contact for network rollout managers in mobile operators and won't, the Government says, be able to hold things up on bureaucratic grounds.

Operators will get also more access to State property for building infrastructure. In really bad blackspots, new legislation is to be introduced that will allow so-called 'mobile repeaters' to be used by ordinary householders. Such equipment boosts a mobile signal by tapping into the correct frequency. Until now, such equipment was illegal under spectrum-licensing and control laws.

A new national mobile signal map is also to be put together and published by the telecoms regulator Comreg sometime this year, specifically with input from the mobile operators' own data. This would be a first.

At present, Comreg's mobile coverage map only shows some city areas and main road routes around the country. As such, it doesn't account for the vast majority of the physical country, including hundreds of towns and villages that suffer from patchy network coverage. To make sure all of this passes off properly, mobile operators will also now be asked to report to a joint Government task force headed by Communications Minister Denis Naughten and Arts Minister Heather Humphries, even though the framework for this is to be informal rather than one bound by any rules of disclosure.

Separately, the government has signalled that it wants to fundamentally change the way that mobile licences are handed out in Ireland. Specifically, Mr Naughten says that he wants new licences to be granted on the basis of geographical coverage targets met rather than population targets. At present, Irish mobile operators' licences only require them to cover between 70pc and 85pc of the country by population, meaning there is no obligation to extend 3G or 4G services into relatively unpopulated areas of the country or rural roads. This leaves massive parts of the country without effective mobile coverage.

Changing the licensing conditions to focus on geographic coverage would mean that Vodafone, Three and Meteor would no longer be allowed to have any mobile blackspots around the country.

However, the new geographic coverage requirements won't be applied to existing 3G or 4G licences, but only to the next batch of 5G licences. These won't be launched for two to three years. Nevertheless, the change in thinking indicates that planners and politicians are beginning to acknowledge that mobile networks, whether privately or publicly owned, are utilities. It is impossible to run a modern economy without something approaching ubiquitous access to the best available speeds.

The last Comreg quarterly report showed that Irish people depend on mobile data far more than network voice calls or texts now. And data usage continues to soar by 70pc per annum. Some may say it is ironic that some of the areas worst hit by weak mobile coverage are the very communities that protest and block mobile masts being erected by operators to boost local signals. Using scare stories about the danger to health, local councils (such as in Kerry) have even succeeded in enacting by-laws that ban masts from within a kilometre of schools. Thankfully, such attitudes are starting to wane, too. We can't have mobile access without masts. Maybe this is the year we'll all fully accept that.

6. Ireland's battle to turn universities' fortunes around in 2017

Among the most under-reported long-term challenges Ireland faces to keep growing its tech ecosystem are the problems facing Irish universities.

Their rapid decline in world rankings is now starting to be noticed by senior tech executives in some of the fastest-growing companies. Only one of the three most-quoted rankings bodies has any Irish college - TCD - in its top 100.

And at 98, it has plummeted compared to its 47th ranking just a few years ago. (Another of the top three rankings has TCD at 224th). Aside from funding cuts that result in decaying campuses, the State won't let our main colleges pay competitive salaries or raise realistic fees from students. That means second-rate lecturers and researchers compared to elite rival institutions in other countries.

That, in turn, leads to less talented students from abroad. And that, in the long run, may lead to less interest from tech, science and pharmaceutical companies in setting up higher-end research facilities in Ireland. A large chunk of research and innovation comes directly out of third-level campuses or college ecosystems. Indirectly, top colleges' influence on building tech communities is even greater, with the smartest students graduating to create new inventions and companies. Ambitious students go to ambitious universities. That goes for everyone from Bill Gates (Harvard) to the Collison brothers (Harvard and MIT).

Ambitious lecturers and professors are exactly the same. Seats of learning and advancement don't come from bare halls, they come from multi-billion dollar endowments, top professors and umpteen multi-million euro research programmes.

Even cities with top universities that don't rank highly in technical courses still get a boost from having the smartest students hanging around. This is a big reason, for example, that London manages to rank ahead of Dublin as a European tech city: it has a couple of the world's top 20 universities nearby and a few more just up the road. Unfortunately, many Irish policymakers don't rate an ambitious third-level ecosystem on a par with other things. Call centre jobs are just as good as research jobs to a great many ministers, politicians and commentators. And college fees staying capped at unrealistic levels is better for short-term political health than higher-achieving colleges and the economic halo around those.

7. Amazon will have a greater impact on Irish retail

Those paying attention will have noticed that this year's Christmas sales started not on January 2 or on Stephen's Day but on Christmas Day itself.

Retailers such as Argos, PC World, Currys and Halfords all kicked off their post-Christmas sales on December 25 online. Harvey Norman went one better, starting at 4pm on Christmas Eve. They were doing so squarely in response to one overarching competitor: Amazon. The world's biggest, most aggressive retailer has never believed in no-shopping days. It has had post-Christmas sales on Christmas Day for years. In the mobile-dominated world of 2016 and 2017, its rules are starting to prevail in the entire industry.

"Shopping patterns will definitely change over the coming years," said Lynn Drumgoole of Retail Excellence Ireland (REI), an organisation that represents 13,000 retail outlets in Ireland. "You have a situation where Irish retailers feel they have to get on it as well and keep the money in Ireland."

Most respected tech analysts only see the shopping habits of ordinary people going one way: online. In the US, UK and other countries, Amazon is introducing same-day delivery as standard on some products, seven days a week. It is also buying up planes to guarantee that it doesn't have to rely on third-party delivery companies to deliver products on time. And it is ploughing money into this because it is still ambivalent about making a profit, preferring to grow more and outdo rivals.

How can traditional retailers compete with that? If drones start delivering consumer products in 2017, it's a safe bet that Amazon will be among the first to do it. We're not doing this to be cool or tech-savvy: it's simply handier.

"The patterns are changing," said REI's Drumgoole. "Ease of shopping is important. People are researching online for the best prices."

Amazon recently launched its Prime Video streaming in Ireland. Is this a precursor to launching the full Prime service, with same day delivery, discounts and other shopping perks?

8. The 'smart home' really is about to arrive

At the tail end of 2016, Facebook boss Mark Zuckerberg posted a video of a new smart home assistant he himself had programmed in his own house.

Called 'Jarvis' (yes, after Iron Man's virtual assistant), the program greets him when he wakes up, cooks his toast and reminds him of upcoming events. It also notices when things happen around the house and takes orders to do things like start a videoconferencing call.

All of this happens without him having to touch anything: it's entirely operated by voice commands and the system's own artificial intelligence. This is nothing like as far-fetched as it once might have seemed.

Because it's within reach, 2017 will see huge strides toward automation, roboticisation and the infusion of artificial intelligence into ordinary homes.

It's happening already. Thousands of Irish workers have their vacuuming done by a small robot vacuum cleaner when they're out at work. If anything happens in their house, smart security cameras activate themselves and send on photos and videos. So, 2017 looks set to be the year when voice recognition system (from Google, Amazon and Apple) let you do things like switch house lights and other electrical devices on and off just by saying so.

Sunday Indo Business

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