It’s only a week or so for MWC to opens. The biggest telecom event in the globe continues to grow, challenging companies to get their message heard. Press releases are no-longer effective. Day 0 – Sunday before the show – is now a full event day. But even that is not enough, leading major corporations host to analysts and opinion leaders in pre-MWC events. So with this background, I wanted to share a few thoughts!
Technology topics are well known and little typically emerges. Similar situation with business trends. What’s more important is the attitude towards a technology or business model that matters. How these are perceived and how they stack up against competition is worth discerning.
3GPP accelerated the standards completion timelines. Vendors are even announcing equipment availability! Yet, we still don’t have spectrum allocations not to mention harmonization that’s required for scalability. Service providers belong to one of two camps: those who want and lead and those who sit back and watch. The requirements and use cases among the ‘leading’ operators are conflicting. First deployments touted in fixed applications does not even fit within the three pillars of 5G. The major business thrust is on enterprise applications where carriers, who excel at B2C, are particularly weak. The ecosystem which promises to be large is still relatively small. This makes 5G the most perplexing of all generations and lead me to be cautious on the mid-term potential.
LTE is a widely successful technology with a rich roadmap. The LTE roadmap keeps rolling out: 4×4 MIMO, Massive MIMO, Multi-user MIMO, 256 QAM, Carrier Aggregation, VoLTE, LTE Cat-m1, NB-IoT, LAA and other technologies and features. With LTE satisfying the requirements of over 90% of major applications, should it not be used as the proving ground for 5G services? If yes, as I think it is, does not LTE provide the early warning signs on 5G success potential?
The wireless ecosystem needs to step up its game in the enterprise market. Opportunities are there in different areas: Private Network, IoT services, MVNOs are some examples. Shared spectrum (CBRS 3.5 GHz) and LTE in unlicensed spectrum will soon be available promising to stimulate the market. Edge Computing is technological enabler. The opportunity to disrupt is real. But the challenge is not one of technology, but of business models and go-to-market strategy. This is where the ecosystem needs to focus.
A hot topic for a few years, virtualization is taking slow but steady steps towards implementation starting with core network elements. Virtualization is disruptive to the extent service providers leverage its potential, and the extent to which other players leverage it to gain competitive advantage over traditional telcos. Virtualization impacts business models and processes, and culture and organization. It’s implementation will be slow and painful – but it has the potential to unleash a tidal wave that will change the industry. The telecom industry must overcome many constraints to fully embrace virtualization and improve its competitiveness. New practices such as open source can then begin to take hold and perhaps even leveraged by new market entrants to gain competitive advantage.
The advent of LPWA technologies such as LoRa and SigFox forced the hand of the mobile industry to come up with competing IoT technology. Last year, the marketing machine kick into gear on NB-IoT, advertising aggressive availability timelines. Today, we are still in trial stage as we anticipated. The challenge in IoT is once again a matter of business. Carriers are asking: where will revenue come from? Identifying the markets for IoT is easy on paper, but difficult in practice. Only the determined operators will succeed in IoT as it does require a transformation across the service value chain to reap the benefits. Many operators are not capable of handling this transformation.
At Xona, we are looking at a number of topics: Artificial Intelligence, Augmented and Virtual Reality, MVNO models, Private Networks, Infrastructure sharing, network architecture and network slicing, and edge compute among other topics. A few of these, such as VR, remain buzz words and likely to stay as such in a telecom context. Other hyped topics such as Artificial Intelligence holds much promise but has seen little in actual implementation despite its potential. Other areas, such as IoT MVNOs, Private Networks, and Edge Computing, hold near-term promise but face business challenges to work through.
The Challenge Ahead
The industry is at a major crossroad. Revenue growth is stalling. The consumer market is near saturation. The Internet ecosystem giants, such as Google, Facebook, Amazon, Apple, Microsoft and others, increasingly see telecom as a bottleneck to their growth opportunity. They are looking to reduce the cost of access. Telecom players don’t feel the pressure to change, yet. But they have not been idle in looking for ways to grow revenue. The challenge is in what it takes to transform as success lies in the execution. Growing revenues will take different approaches: content, video, enterprise services are some examples. Today’s industry challenge focuses on business models, work processes, organizational behavior and culture. Transformation along these dimensions will be critical to capture high-value services.
The Xona team will be at MWC – contact me to schedule a meeting.