This past week, I had the pleasure to moderate a panel on digital transformation and to join my Artificial Intelligence-expert partners at Xona in conducting a workshop on AI at TMT Finance World Congress to a crowd of ecosystem professionals. It is ironic that an industry that is a catalyst to the transformation of many other industries is itself in dire need to change. Telcos increasingly feel they are in a ‘straight jacket’ with few and painful options [some telcos actually still don’t see that: many incumbents still enjoy regulatory protection and sit happy where they are!]. Launching new services in the digital world is exponentially more complex with hardware-based networks. Transformation into efficient ‘digital entities’ through software and data is hard. Financial markets value enterprises with consideration to their future cash flow. Amazon, Google and Microsoft market cap alone stand at ~4x that of AT&T, Verizon, Sprint and T-Mobile combined. With the background, what does AI has to do with digital transformation?
Cloud players continue to set record revenues and profits while the telcos grapple with stalled revenues. The market cap of three to the top cloud players – Amazon, Google and Microsoft – stand at around $1.9 trillion while the top 4 US telcos – AT&T, Verizon, T-Mobile and Sprint, stand at under $500 billion. The telcos have lost the ‘Cloud 1.0’ battle to the OTTs. But, is there a way for the telcos to be more competitive? More specifically: can edge computing provide the telcos a competitive advantage over the cloud players?
[Source: Xona Partners]
Performance predictability is fundamental to the operation of any service provider. It is the foundation on which processes are built. Processes drive efficiency. So when it comes to deploying wireless technologies on large scale, service providers look for the “cookie-cutter” approach. No matter what a technology is, it will get little if any market traction if it cannot be deployed with relative certainty of performance. Continue reading
Blockchain investments have long ceased to be the preserve of the fintech industry, having branched out over the past 2 – 3 years to different industries including health care, real estate, insurance, retail, and education to name a few. The telecom and Internet sectors are no exceptions. Focusing on the telecom space, we find that we are in the very early stages:
1- The VC arms of telecom service providers began making investments in blockchains as early as 2015.
2- Blockchain investments remain sporadic and limited to a few telcos in consortium with other investors.
3- The type of investments vary among different applications albeit a preference to invest in complementary solutions. Continue reading
It has been a long time since I attended an ‘academic’ conference, focusing instead on industry and finance events. But this week, I had the chance to drop by at IEEE VTC Fall, one of the leading conferences on mobile technology to get the pulse on the state of R&D and keep tab on latest developments from the best researchers in this field. I also moderated a panel on the ‘backnets,’ where an open discussion ensued on the evolution of the RAN and transport networks. From all perspectives, 5G dominated the topics. Here, I like to summarize some of the highlights. Continue reading
Blockchains has evolved from a technology for cryptocurrencies to one supporting applications in multiple industries, including telecom. A few leading telcos are investigating the potential of blockchains (link). Many applications are being proposed including roaming fraud mitigation, flexible service offering or selection, IoT contracts, authentication and many use cases. However, when it comes to actual and practical solutions, we are still at the early stages. Where and how to apply blockchains are still hard questions to answer. Continue reading
A survey of smart city activities around the world shows that much of the focus of smart city projects remains on establishing the most basic of services such as connectivity. In fact, there is a clear lag in the deployment of technologies and services in smart city applications, versus what technologies enable. We call this the cascading technology trap. Continue reading
Applications of millimeter wave (mmWave) technology in 5G fixed access are subject to a few important levers. To start, it’s important to understand that the cost of fixed access networks is directly proportional to the number of houses passed. This provides the advantage of growing the network selectively on geographic basis. But it also means that economies of scale are slower to affect the business case: passing more houses means more expenses. By comparison, mobile networks are designed to cover a wide area from the start which places emphasis on gaining subscribers to load the network and scale revenues. Continue reading
Artificial Intelligence is riding the hype curve, again! Pervasive digitization and connectivity, advances in processing power and low-cost storage are making possible what once could only be imagined. AI is penetrating every aspect of business with organizations seeking to build knowledge from data to gain competitive edge, sway customers and increase profits. This created high demand for AI expertise, tools and solutions as organizations ponder their AI strategy. But what to do about AI? How to build an investment thesis based on facts?
At Xona Partners, we have been engaged in artificial intelligence research since the mid-1990’s. In recent years, we have helped organizations develop their AI strategy and solutions, and investors in due diligence and deal flow sourcing. We distilled our observations on AI M&As into 5 fact that technology investors must consider when making investments in this space. This applies to technology companies looking to develop or acquire AI-based solutions, or financial investors looking to make investments in AI startups. The following 5 facts will help guide their strategy: Continue reading
We’re mid-way through 2017. That’s only 8 months from the Pyeongchang winter olympics – supposedly a poster for 5G technology [Link2]. Obviously, true, commercial 5G will not happen in 8 months, but the hype machine will kick into increasingly higher gears. Hence, I thought to put together a few thoughts on the state of the market and highlight what I foresee as a potential problem the market may come to face in light of how 5G is evolving: the cascading technology trap. The consequences of this challenge is to delay the deployments of 5G beyond the current estimates of analysts and industry players. Continue reading
Edge computing has been attracting a lot of interest lately. The reasons are many, not the least is the potential for service providers to create and monetize new services and applications. I recently chaired a panel on MEC at the Layer123 NFV Congress 2017 in San Jose. In speaking with different ecosystem players, I noted a few misconceptions related to edge computing: Continue reading
This past week saw Verizon overtaking AT&T in bidding for Straight Path Communications, owner of 28 and 39 GHz ‘5G’ spectrum, closing the contest at $3.1 Billion, more than double AT&T’s initial bid of $1.25 Billion ($1.6 B transaction value). The acquisition is framed within the context of spectrum for 5G services. What makes this an interesting case is that it comes at a time when both carriers did not play actively in the 600 MHz auction with Verizon not bidding at all, and AT&T spending just over $900 million in the $19.8 Billion auction. So, is this a rational acquisition? Continue reading and take the poll at the end of the article! Continue reading
One clear trend in wireless is the increasing level of network complexity and the corresponding rise in operating expenses. Networks support three or four technologies (e.g. GSM, 3G, LTE, Wi-Fi). A proliferation of frequency bands ranging between 600 MHz and 3500 MHz lead to different service performance. There are many different types of base stations such as macro cells and small cells. More networks are planned in the mix such as 5G, LAA and MuLTEfire. A nightmare scenario is developing for network operators who have to maintain these networks and meet target performance level. Operating expenses are increasing at a time when revenues are stalled. This depressed EBITDA margins into 20% range for some service providers from a level that ranged between 40-50% only a few years ago! Could Artificial Intelligence (AI) be the answer to conundrum? Continue reading
Two days at TMT Finance M&A Forum in London were an excellent forum to get the perspective of the business community on developments in telecom, media and technology space. For me, it was the perfect opportunity to hear the CFOs’ view points on many topics that occupy CTOs – anything from evolution of technologies in the telecom and data center space to emerging technologies such as virtual and augmented reality and artificial intelligence. After many candid discussions, I wanted to note a few observations: Continue reading