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Brexit Fallout

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6/30/2016

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iainmorris
iainmorris
7/15/2016 | 11:02:12 AM
Good players turning it to their advantage. Eh?
I'm curious as to why the second-most popular choice in the poll is that good companies will turn this to their advantage. How, exactly, do respondents think Brexit can be turned to any kind of advantage by a communications player? Full disclosure - I chose the no-silver-lining-whatsoever option and am struggling to understand how there can be any upside to this from a business perspective, even if you accept the argument that being freed from Brussels regulations would be a good thing. I also don't understand how anyone in their right mind can say this won't have any impact on communications players at all (I can go along with those arguing it might not have that big an impact, and I hope they are right). Do these respondents think communications players operate outside the normal economy or something?
iainmorris
iainmorris
7/7/2016 | 7:00:28 AM
Re: Brexit Comms
I agree with most of Gabriel's points about the specific impacts Brexit could have on the comms sector. There is one he didn't mention, however, and that is on the employment side. It's clear a number of businesses are thinking of relocating headquarters (in the case of banks because they are worried about losing 'passporting' rights) to other parts of Europe and Vodafone has suggested it could be among them if quitting the European Union puts an end to the free movement of people (which could make employing Europeans in the UK far more awkward in future). That is something Brexiteers have demanded, although it's hard to see them getting their way if they want to continue trading with the EU. Nevertheless, the uncertainty is not good -- and not just for the bigger employers but also a lot of the smaller tech companies setting up shop in London. Vodafone boss Vittorio Colao has also expressed concern about being locked out of the European market for digital services in future.

More generally, I don't see any silver lining to Brexit at all. I can go along with the argument that the impact might not be as bad as feared but I don't think that is any kind of silver lining and there are so many Brexit risks -- both political and economic -- that it's hard to feel much confidence whatsoever. Just look at what's happening at the moment, with concerns about the implications for Ireland (if a hard border is reinstated between Northern Ireland and the Republic), Scottish independence and the potential break-up of the UK's main political parties (this seems inevitable in the Labour Party and I can't see the Conservatives surviving in their current form given the rift in their ranks). And then there's the spillover effect, as extremist politicians like France's Marine Le Pen enjoy a boost from what's happened. I take the point the EU has many flaws as a supra-national institution, but the UK system has many as a national one. The answer is not to run away and ultimately find you are bound by the rules the EU sets anyway.
brooks7
brooks7
7/6/2016 | 9:28:51 AM
Re: Brexit Comms
Just to be clear...I am not sure if Brexit will mean anything economically.  My point was that coverage of it declared that Brirain is now back in the stone age and that everyone will be starving soon.  My point was more about the news crisis cycle and less about the reality on the ground.

seven

 
Gabriel Brown
Gabriel Brown
7/6/2016 | 5:39:57 AM
Re: Brexit Comms
Yes, OK. In the sense that business in general will suffer (is suffering) from brexit then communications industry will suffer as well.

I can see several communications specific issues -- for example:
  • With the pound tanking, buying network gear from Ericsson, Nokia, Cisco, Huawei, etc., will be more expensive.
  • Data sovereignty, and where companies locate data centers, is now a brexit issue. We'll lose some investment from that.
  • It'll be interesting to see what operators that want to serve European OpCos from central data centers make of it. If I'm in the UK and my mesaging goes via Germany, is that still OK? And vice versa, of course.
  • Regulation in general, including spectrum allocation, will be disrupted.
  • Roaming?

In spite of all that, and even though I think it was a collective mistake by the British people, I'm coming around to a more positive view. The EU, as a supra-national government, was not quite perfect after all.
brooks7
brooks7
7/5/2016 | 9:38:27 AM
Re: Brexit Comms
Gabriel,

It is all about the unknown.  I see some really odd mainstream news presentations that act like the EU is some form of closed market.  That the US, China, and other countries don't trade with the EU.  The markets like stability, so exit would definitely impact the stock market for a short time.  But we have moved to this era of crisis based news and that is best presented by the sky is falling.  I never saw anybody from the leave side presented as having any rationality at all.  Granted I am an outside observer, but I don't see how anyone (given the general coverage) could see exit as anything other than an economic disaster.  But I would have to say the EU as some savior organization does seem disingenuous.  I didn't see anything particularly wrong with it.  Nothing particularly right either.  Just seemed like a level of government that didn't do very much that impacted most folks.  

seven

 
Gabriel Brown
Gabriel Brown
7/5/2016 | 4:07:01 AM
Brexit Comms
I was a Remain voter (for various reasons), but I don't see a compelling reason to think being out of the EU will be much worse for the UK communications industry.

R&D and university funding may suffer.

Capital allocation by big European groups may suffer (that really means Vodafone, Telefonica, Liberty, and 3), but the EU wasn't really a major help in that regard anyway -- if anything you could argue it starved UK operators of investment.

In fact, O2 was manifestly a better company before it was owned by Telefonica. EE did much better as a British company than Orange (France) or T-Mobile (Germany) did as independents. Obviously these are complex issues.

Maybe European enterprise service providers will be impacted (Colt, Interoute, etc.)

What are people's reasons for thinking the "Brexit decision will negatively impact the UK's communications market"?

 
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