There’s not event like Mobile World Congress for gauging the pulse of the industry: 108,000 visitors and over 2,300 exhibitors provide the right platform for that. As I participated with other partners at Xona Partners in drafting our observations from MWC, I wanted to share a few notes and thoughts:
- Searching for the next engine of growth: Growth is stalled; the ecosystem believes it’s not capturing its share of value. The industry is actively searching for ways to grow. The leading approach is to use more technology: 5G, IoT, and artificial intelligence (AI) were prominent. Highlighted applications include drones, robots, virtual and augmented reality (VR/AR).
- 5G fragmentation: different interests continue to pull the 5G vision into different, even opposing directions. Primarily, fixed wireless application is the leading use case based on interest from Verizon. Other operators like AT&T, SKT,Docomo are in the vanguard, but their attitude is beginning to shift. It feels like 5G will be a technology ‘without a defined beginning or an end.’ Or perhaps, a ‘journey rather than a technology!
- Shifting expenditures: Expenditures will shift from radio to core and from capex to opex. Capex on radio access networks will continue to slow focusing on LTE upgrades and new deployments in emerging markets. Operators will shift spending to the core network as they seek flexibility to define and launch new services. Specifically, SDN/NFV solutions will benefit. However, these technologies have an opex-based model. Vendors will be more open to partner and revenue share with operators.
- IoT is a [huge] market challenge: With all the hype surrounding IoT, the major objective for operators is to identify a scalable market. What services to sell and where? For IoT to make a dent into MNOs’ revenues, scale is essential. Integration has to be straight-forward. Identifying markets that scale and making the right business value proposition is the challenge. All the hype around technology – NB-IoT, LTE Cat-m1, LoRa, SigFox, etc. – is secondary.
- Time is ripe for M&A’s: Stalled growth will drive entities to reduce cost and engage in M&As to position strategically for the next wave of activities. The environment could not be better for M&As among MNOs in the US and India. On the vendor side, the blurred boundaries between telecom and Internet, and mobile and fixed in addition to evolving business models will drive new [and interesting] moves.
- LTE will be around for a long time: LTE has a long roadmap and enhancements that are even beyond the capabilities of many MNOs to implement. MNOs will accelerate refarming 2G and 3G spectrum to LTE. This will benefit technologies such as VoLTE. Moreover, there are few applications that LTE cannot support. This is important and brings me to the next point, which is technology is secondary.
- Technology is secondary: The challenge for MNOs is not one of technology, but of business models and operational processes. It is one of culture and DNA! Mobile penetration reached saturation. The enterprise sector and vertical markets are the next target. MNOs don’t need to wait for 5G to address these markets. LTE can be used today to test the market. That requires MNOs develop the proper framework for enterprise engagements.
A Concluding Thought
This June marks the 10-year annivarsary of the iPhone. We are now in phase that resembles 2006-2007. By that time, 3G buildouts have taken their course. The market was searching for its next growth engine [then, voice was still considered the ‘killer app’!]. Apple was an outsider to the industry [they still make a point that they are – they don’t exhibit at MWC!]. The iPhone provided the fuel for the explosive growth in data services which validated the business case for LTE. Who, will disrupt the market today? Could it be the Internet giants who see Internet access as a bottleneck to their growth? Or a player from another adjacent industry? What will lead the disruption? Would that be a consumer device, an infrastructure play, a service, a business model, or all these combined?
Perhaps some answers will be provided by MWC 2018!
Click here to download: Xona Partners – Mobile World Congress 2017: The Hype versus the Reality.