Jacques Bonifay wears a lot of hats – while he is the CEO of Transatel (which describes itself as a European MVNE/A (mobile virtual network enabler/aggregator), he is also the president of MVNO Europe, which represents mobile virtual network operators in Europe, and its French equivalent Alternative Télécom. It is also worth noting that back in March, NTT Group (which includes NTT Docomo, the Japanese mobile network operator) bought a majority stake in Transatel.
Before we get into the implications of this deal, let’s make things a little less abstract. Transatel is active in the connected car sector, providing personal SIM card and mobile data plan services for Jaguar Land Rover’s customers in the UK, Germany, Italy, Spain, Portugal, Belgium, the Netherlands, Luxembourg and France, under its Ubigi brand. The SIM cards enable onboard Wi-Fi and infotainment services (as part of a three-year 500mb/month bundle), while also allowing Jaguar Land Rover to update the vehicles’ software over the air. The latter (which uses a different and “highly secure” ‘pipe’) removes the need for cars to go back to the dealer for critical updates, thereby saving a lot of time and money. Transatel is also providing a similar service for Fiat Chrysler Automobiles.
From manufacturer to MVNO
“When we speak to car manufacturers,” says Bonifay, “we always tell them that in the long term they need to become telecom operators, as it’s strategically vital for them to be able to control the connectivity ecosystem around their vehicles. Why? Because there are soon going to be so many apps running in a car – some managed by the car manufacturer, others by the driver, some by the passengers and still others managed by third parties, such as the driver’s insurance company. The billing associated with these apps is going to be quite complex. So, if you want to implement this well you need to have a core network.
“This also holds true from a security perspective. If you really want to control the security, you need to have access to core network elements: the router, the SIM card, the HLR (Home Location Register) or HSS (Home Subscriber Server). Additionally, because these systems are going to be quite complex, you want to have one single platform for the world, as opposed to relying on multiple operators. To benefit from a single, global platform you must either become an MVNO yourself or rely on an enabler such as Transatel.”
Of course, the automotive sector is by no means the only one that regularly crosses international borders and Transatel is currently providing global cellular connectivity for Airbus’s Skywise open data platform, which provides airlines with predictive maintenance capabilities. The amount of data gathered is considerable (roughly 100MB/hour of flight/plane) and uploaded via 4G when the aircraft lands. Transatel also provides the connectivity used by the French Ministry of Interior to upload the data from its network of highway speed cameras.
Returning to NTT Group’s decision to buy a majority stake in Transatel, Bonifay says NTT was prompted by the group’s lack of an international cellular connectivity business and “now we’re organising ourselves to generate synergies – all of NTT’s 272,000-strong worldwide workforce, whenever they need connectivity, they come to Transatel”. In addition, the group is leveraging its relationships with Japanese car manufacturers and Transatel’s experience with European car manufacturers, while also enabling Transatel to use NTT’s worldwide salesforce and data centres to grow its industrial IoT business.
Mixed opinions on 5G
Turning to how 5G is perceived by the automotive industry, Bonifay says there are a few people who are overly preoccupied by 5G and its capabilities, while others “just don’t care”. That said, “I’m quite surprised by how seriously car manufacturers are looking at 5G”. He adds there is a lack of clarity around how 5G will be applied to this sector. It is worth noting here that the 5G Automotive Association (5GAA) was founded in 2016 to address this issue.
Speaking of 5G, France’s spectrum regulator Arcep has recently completed consultation on the procedure for awarding the 3,490-3,800MHz band in Metropolitan France (it expects to be able to launch the spectrum award procedure in the autumn), and Bonifay says the proposals are “quite in favour of MVNOs”.
“[Arcep wants] to make sure that the MNO[s] are going to give access to MVNOs and especially to IoT MVNOs to be sure that we’re going to have diversity and capacity to innovate in France.” He adds that MVNO Europe made an official statement at the European level in which he in his role as the organisation’s chairman invited “the European Member States that have not yet determined their terms for the upcoming own national 5G auction procedures to inspire themselves from Arcep’s text”.
In particular, MVNO Europe welcomes the way that the draft text requires future radio spectrum licensees to commit to: “(1) [enabling] MVNOs to offer differentiated services (ie, services different from those that the Host MNO will provide itself); (2) [refraining] from imposing exclusivity terms on MVNOs without due justification (ie, MVNOs should be able to conclude multiple wholesale access agreements with different operators); (3) [providing] wholesale access to (Full) MVNOs on reasonable economic terms (ie, preventing margin-squeeze on MVNOs); and (4) [enabling] MVNOs/MVNEs/MVNAs to serve markets with new (5G) RAN technologies simultaneously with host MNOs.”
There is a power struggle between MNOs and MVNOs, which as Bonifay points out is playing out differently from country to country, with “MVNOs wanting to be on multiple networks and the MNOs don’t want the MVNOs to be on multiple networks, because they don’t want the MVNOs to have better coverage [through allowing roaming between multiple MNOs in the same country]”. He adds that “it’s technically possible to have dynamic roaming between MNOs based on price and bandwidth using an MVNO – it only depends on whether the MVNO has the necessary agreements with the MNOs in question.
“In certain countries, some MNOs are very open: the more connectivity you buy, whether as an MVNO, a car manufacturer, or any company acquiring airtime, the better the price. In other countries, some mobile operators are way more resistant against the natural arbitration of market competition.”
Returning to France, Bonifay expects that the winners of the Arcep spectrum auction process will be known by the end of this year or early in 2020, and the first 5G network to launch in France in June. However, just like in the UK, the geographical coverage is “going to be very small initially and that’s going to be the case for at least the next two to four years. It will only be 4G but with more speed – more speed is good, but it doesn’t fully change the paradigm. The real change will come when we move to real 5G standalone with a 5G core network, and that’s not going to be before 2023, 2024.” However, even by that point, Bonifay expects only part of France to be covered by 5G. So he believes that autonomous driving will not occur prior to 2025.
Of IoT and eSIMs
Bonifay says France’s LTE-M network is still being tested. While he highlights the technology’s ease of use, Bonifay also explains that because the amount of revenue generated per LTE-M device is very small, LTE-M services need to be delivered at a European scale for them to be commercially compelling from Transatel’s perspective.
He says while technically it is possible to use eSIM technology in conjunction with NB-IoT (and LTE-M), the low ARPU (average revenue per unit) associated with low-power, wide-area IoT technologies, combined with the cost of implementing eSIMs for so many units (Bonifay gives a range of 0.5 to two million units as an example), makes it commercially unattractive.
He adds: “Transatel was one of the first players to push for eSIM. We’ve been compatible for several years. We implement eSIM in a way that allows us to prove to our customers we’re not using any tricks to keep them stuck to us. That’s how we differentiate ourselves versus the mobile network operators.”
This may seem somewhat counter-intuitive, but one only has to scoop up a handful of sand, grip it tightly in your fist and watch the grains fall through your fingers – as opposed to simply holding the same amount of sand on your outstretched palm – to see the wisdom in this approach.
CV – Jacques Bonifay
Co-founder Jacques Bonifay has been the CEO and chairman of Transatel since 2000. Before founding Transatel, Bonifay had a career at Airbus Group, and afterwards at McKinsey & Co. He later headed strategy and business development for Alcatel’s Professional & Consumer Division.
He is president of Alternative Télécom (ex-Alternative Mobile), the French association of alternative fixed and mobile operators. Bonifay is also president of MVNO Europe, where he supervises lobbying initiatives directed towards the European Parliament, the DG COMP and DG CONNECT. He has an MBA degree from INSEAD and an engineering degree from ENSERG/INPG.