As the most recently established and still the smallest of the “big four” UK mobile network operators (MNOs), Three has cultivated a reputation for disruption and innovation, pitching its network at data-hungry, heavy users from the get-go, and tempting customers with memorable marketing campaigns and offers such as free data roaming in multiple destinations, which it offered long before the European Union (EU) stepped in.
As the UK moves into the 5G era, with the much-publicised launch of EE’s first 5G service at the end of May 2019, Three, which is part of the larger Hong Kong-based CK Hutchison group, is betting that its own network (which officially launches in August 2019) will be up to two times faster than EE’s from the minute it launches, and thanks to a well-timed acquisition and some luck in the 2018 5G spectrum auction, it may have a surprise up its sleeve.
Behind the scenes, Three director of network strategy and architecture, Phil Sheppard – who was with the firm for the launch of its 3G and 4G networks, too – is on a mission to rebuild the operator’s IT, culture and core network, to help it shape the 5G world, and perhaps take market share from its rivals.
Understandably, Sheppard says, Three’s core strategy going forward is based on the idea that demand for capacity and data traffic volumes across Three’s 4G and 5G network is inevitably going to skyrocket.
“We need to be agile and flexible, so what is the best way of doing that? An incremental build or a completely new transformation?” he says.
The answer came when the proposed merger between Three and Telefónica’s O2 was shot down over regulatory concerns. Sheppard says Three’s management then asked what they could do themselves to enhance the MNO’s market position.
“We decided we needed to do a greenfield transformation of our technology, and together with that our operating model,” he tells Computer Weekly.
Enhancing the 4G base
Some of these changes have already been made. Last year, for instance, Three set to work on enhancing its 4G network, building a fibre backhaul relationship with SSE Enterprise Telecoms and adding Infinera’s dense division wave multiplexing technology, which should ultimately boost capacity by as much as 20 times.
It has also brought into use some additional L-band spectrum that it acquired from Qualcomm in 2015 after the band was harmonised in Europe to accommodate additional downlink bandwidth; deployed new, more advanced antennae, incorporating 4-transmitter-4-receiver (4-T-4-R) technology; and started work on refarming increasingly defunct 3G spectrum to 4G.
Based on this activity, Three was able to launch a 4G+ service at 2,700 of its most heavily used sites at the end of 2018, using carrier aggregation to increase network capacity by a third at these locations, which include shopping centres, stations and so on.
Cloud and software everywhere
But to upgrade a 4G network, and to begin to implement a 5G successor, carries a significant investment. As the smallest MNO with the smallest budget and the smallest customer base, Sheppard knew there was a need to keep costs down.
“We need to grow and we need to do it at the lowest cost, so that forces us to innovate,” says Sheppard. “That’s driving a lot of what we’ve done. Our capex [capital expenditure] budget is pretty much half the average of the others, and we have to use that wisely.”
To this end, Sheppard has been leading a transformation of Three’s IT, committing to an all-in cloud strategy, with roughly 80% of applications going into the Microsoft Azure cloud – most of the rest being the products of software-as-a-service suppliers with their own proprietary cloud hosting arrangements.
“We need to grow and we need to do it at the lowest cost, so that forces us to innovate”
Phil Sheppard, Three
“The idea is we no longer focus all our efforts on building infrastructure and hardware – we go with people who do that and we focus on the value-add of the apps on top and what we do with them,” says Sheppard.
As a result, Three is now able to start to move its customised product development processes into what Sheppard refers to as a “configuration-type environment”, rather than writing code from the ground up.
“Some of that is already live – for example, our billing records – but we’re going to do a very careful roll-out. I don’t like a big-bang approach,” says Sheppard. “We’ll be introducing different products in different areas over a period of time and then we’ll migrate customers in a gradual way.”
Alongside that, he continues, there’s a general reorganisation of how Three’s internal IT teams work to build a more digital-first mindset. “How the operating model changes is as important as how the technology changes,” says Sheppard.
This brings us to the newly built, software-defined, virtualised core network the operator has installed from Nokia.
“We used to have four datacentres and all our traffic was brought back to those – it was a traditional core network. We decided to move to an entirely virtualised cloud network, and we also decided to distribute that around the country so that it is closer to where the customers are,” explains Sheppard.
“We now have 20 edge datacentre sites planned, 17 live and three due to go live later this year, and they’re distributed around all the major urban hubs.”
Three claims its 99.9% virtualised core network is a world first for a mobile operator. Others around the world have adopted network virtualisation, but tend to restrict its use to specific business units, often for enterprise customer deployments.
“Everything is virtualised apart from one hardware component,” says Sheppard. “We’ve been in staff trials for a couple of months – we have about 3,500 people on it now. Soon we’ll start to very gradually migrate customer traffic to it – we’re being quite cautious about that.”
In practice, once Three customers’ devices are running on the new core, users should notice no difference at all – the benefits are all at the back end, with Three benefiting from the ability to scale up its capacity quickly and at vastly reduced cost, and introduce new customer-facing services quicker, too.
“That’s been quite a journey,” admits Sheppard. “It’s been a journey for our team – and for Nokia as well, I’m sure, in terms of changing the way of looking at the network.
“A lot of our projects are about capacity. Maybe half of them, maybe more, are just about putting capacity into the network, and that’s because each of these capacity expansions needs customised hardware and each one has to be plumbed in separately and configured.
“That’s no longer the case, it’s standard off-the-shelf hardware, we just make sure we have enough of it, and then the software can configure the expansion,” he says.
Three has put about 1.2Tbps of capacity in the new core network, which will grow in the future. Sheppard believes that, at the moment, a future capacity expansion could be done in hours, whereas previously it would take months.
“We’re not quite there yet, but once we’ve got the automation slicker, it will be a case of running a few extra software instances in minutes. That’s our aim, anyway,” he says.
The goal: 5G
It should be obvious by now that all of this transformation ultimately supports one thing, and one thing only – the roll-out of 5G, which is now imminent.
To start with, Three’s spectrum position has been enhanced through its 2017 acquisition of UK Broadband, the firm behind the Relish 4G fixed wireless access (FWA) service. This brought with it a large amount of spectrum in the 3.4-3.8GHz spectrum bands, which luckily for Three turned out to be the prime 5G spectrum bands. It is, incidentally, Relish home broadband customers who have been trialling 5G in Camden, and home broadband will be the first element of Three’s 5G service to go live.
The upshot of this is that Three has 140MHz of spectrum to play with, compared with Vodafone’s 50MHz, and EE and O2’s 40MHz apiece. However, Sheppard’s team then took things a step further.
“We also got the conditions changed with Ofcom so that we could merge some of that spectrum together, so we’ve actually now got a contiguous 100MHz block and another 40MHz block.
“The 100MHz block is the standardised maximum size for a 5G carrier,” he explains, “so what we call a single carrier device [a 5G smartphone] can use 100MHz maximum.”
But what does this actually mean? Given that Three has twice as much space for a device to use, this means it can distribute its traffic much more efficiently than its rivals.
“Basically, this translates into the customer experience as a huge speed advantage – combining the massive MIMO [multiple input, multiple output] with 140MHz of spectrum means we have a huge advantage over any other operator, and it gives us the capacity to grow as well,” says Sheppard.
“Compared to Vodafone, we have twice as much, so that makes us literally twice as fast with twice as much capacity. That’s just a technical fact. And once we have devices that can do two carrier blocks, the full 140MHz comes into play and we will have an even bigger advantage,” he says. This could happen as soon as 2021.
Of course, Sheppard is careful to caveat this with the fact that telecoms regulator Ofcom will sell off more spectrum in the near future, but for now, things look quite rosy for Three.
The operator will launch its 5G service in London in August 2019 and then in more than 20 other locations around the UK by the end of the year, focusing first on urban areas and the 6,000 sites that carry roughly 80% of its network traffic.
“We’ve gone with the most advanced antenna technology that you can get, which is massive MIMO technology – to be more precise, 64-T-64-R, which is the largest array you can get at the frequency we’ll be operating at,” says Sheppard.
“The big advantage of that is that it provides beamforming, which has two advantages. One is that it massively increases the capacity of the site, the second is that it improves coverage at the site as well, so that will be our primary 5G technology.”
Three is focusing most of its efforts on massive MIMO, although it recognises there will be sites where it can’t deploy the technology. Given its capacity benefits – up to five times higher than traditional antenna – it feels like a no-brainer to use it, says Sheppard.
Changing consumer perceptions
It is a truth best acknowledged that overall consumer perception of Three is not where it could be, something Sheppard identifies as dating back as long ago as 2003, when it launched a 3G network that was patchy and turned off early adopters.
Phil Sheppard, Three
A combination of network-sharing arrangements with EE, a better-handled 4G roll-out and the passage of time have done much to improve the situation, but Sheppard concedes there is still something of a lag in how the business is perceived by consumers. He hopes 5G will change that.
“People who are with Three now generally have a very good perception of us, but for those who either haven’t experienced us, or did in the past but had a negative experience, there’s clearly lag,” he muses.
“We hope that having a really good product will attract a lot of customers. We want to combine the very fast and well-performing network with an easy-to-interact-with customer experience.
“We’ve got the IT changes in place to give users a very simple experience across all the channels that we work in. The combination of that plus a bit of clever marketing should provide us with a base for growth and a new reason to consider Three,” he concludes.